exhibit_10-12.htm


    Prepared
by, and after recording return to:

    


    Michael
Van Voorhis, Esquire

    Troutman
Sanders LLP

    P.O. Box
1122

    Richmond,
Virginia  23218-1122

    


    


    


    


    


    


    


    


    MULTIFAMILY
MORTGAGE,

    ASSIGNMENT OF
RENTS

    AND SECURITY
AGREEMENT

    


    (INDIANA
– REVISION DATE 03-31-2008)

    


    


    


    


    


    


    


    


    


    I certify
under penalty of perjury, that I have

    taken
reasonable care to redact each Social

    Security
number in this document, unless

    required
by law.

    


    Michael
Van Voorhis, Esquire

    


    



    
      
         


      

      
         


        
        

      

      
         


      

    


    FHLMC
Loan No. 534381227

    Castle
Creek

    


    


    MULTIFAMILY
MORTGAGE,

    ASSIGNMENT
OF RENTS

    AND
SECURITY AGREEMENT

    (INDIANA
– REVISION DATE 03-31-2008)

    


    


    THIS
MULTIFAMILY MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the "Instrument") is made to be
effective as of the 16th day
of December, 2009, between NLP
CASTLE CREEK, LLC, a limited liability company organized and existing
under the laws of Delaware, whose address is c/o NTS Development Company, 10172
Linn Station Road, Louisville, Kentucky 40223, as mortgagor ("Borrower"), and HOLLIDAY FENOGLIO FOWLER,
L.P., a limited partnership organized and existing under the laws of
Texas, whose address is 9 Greenway Plaza, Suite 700, Houston (Harris County),
Texas 77046, as mortgagee ("Lender").  Borrower's
organizational identification number, if applicable, is 4739662.

    


    Borrower
is indebted to Lender in the principal amount of $13,895,000.00, as evidenced by
Borrower's Multifamily Note payable to Lender, dated as of the date of this
Instrument, and maturing on January 1, 2020 (the "Maturity Date").

    


    TO SECURE
TO LENDER the repayment of the Indebtedness, and all renewals, extensions and
modifications of the Indebtedness, and the performance of the covenants and
agreements of Borrower contained in the Loan Documents, Borrower mortgages,
warrants, grants, conveys and assigns to Lender the Mortgaged Property,
including the Land located in Marion County, State of Indiana and described in
Exhibit A attached to this Instrument.

    


    Borrower
represents and warrants that Borrower is lawfully seized of the Mortgaged
Property and has the right, power and authority to mortgage, grant, convey and
assign the Mortgaged Property, and that the Mortgaged Property is unencumbered,
except as shown on the schedule of exceptions to coverage in the title policy
issued to and accepted by Lender contemporaneously with the execution and
recordation of this Instrument and insuring Lender's interest in the Mortgaged
Property (the "Schedule of
Title Exceptions").  Borrower covenants that Borrower will
warrant and defend generally the title to the Mortgaged Property against all
claims and demands, subject to any easements and restrictions listed in the
Schedule of Title Exceptions.

    


    UNIFORM
COVENANTS-CME REVISION DATE 8-14-2009

     

    Covenants.  In
consideration of the mutual promises set forth in this Instrument, Borrower and
Lender covenant and agree as follows:

     

    1.           DEFINITIONS.  The
following terms, when used in this Instrument (including when used in the above
recitals), shall have the following meanings:

     

    (a)           “Affiliate” of any Person means
(i) any other Person which, directly or indirectly, is in Control of, is
Controlled by or is under common Control with, such Person; (ii) any
other

     

    
      
        
        

      

      
        
          
            

          
PAGE 1

        
        

      

      
        
        

      

    

     

    Person
who is a director or officer of (A) such Person, (B) any subsidiary of such
Person, or (C) any Person described in clause (i) above; or (iii) any
corporation, limited liability company or partnership which has as a director
any Person described in subsection (ii) above.

     

    (b)           “Approved Seller/Servicer” is
defined in Section 43(b).

     

    (c)           “Assignment of Management
Agreement” means Assignment of Management Agreement and Subordination of
Management Fee of even date herewith among Borrower, Lender and Property
Manager, including all schedules, riders, allonges and addenda, as such
Assignment of Management Agreement may be amended from time to
time.

     

    (d)           “Attorneys’ Fees and Costs”
means (i) fees and out of pocket costs of Lender’s and Loan Servicer’s
attorneys, as applicable, including costs of Lender’s and Loan Servicer’s
in-house counsel, support staff costs, costs of preparing for litigation,
computerized research, telephone and facsimile transmission expenses, mileage,
deposition costs, postage, duplicating, process service, videotaping and similar
costs and expenses; (ii) costs and fees of expert witnesses, including
appraisers; (iii) investigatory fees; and (iv) the costs for any opinion
required by Lender pursuant to the terms of the Loan Documents.

     

    (e)           “Borrower” means all entities
identified as “Borrower” in the first paragraph of this Instrument, together
with their successors and assigns.

     

    (f)           “Business Day” means any day
other than a Saturday, a Sunday or any other day on which Lender or the national
banking associations are not open for business.

     

    (g)           “Claim” is defined in Section
18(l).

     

    (h)           “Collateral Agreement” means
any separate agreement between Borrower and Lender for the purpose of
establishing replacement reserves for the Mortgaged Property, establishing a
fund to assure the completion of repairs or improvements specified in that
agreement, or assuring reduction of the outstanding principal balance of the
Indebtedness if the occupancy of or income from the Mortgaged Property does not
increase to a level specified in that agreement, or any other agreement or
agreements between Borrower and Lender which provide for the establishment of
any other fund, reserve or account.

     

    (i)           “Condemnation” is defined in
Section 20(a).

     

    (j)           “Control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person whether through ownership of voting
securities, beneficial interests, by contract or otherwise.  The
definition is to be construed to apply equally to variations of the word
“Control,” including “Controlled,” “Controlling” or “Controlled
by.”

     

    (k)           “Controlling Entity” means an
entity which, directly or indirectly through one or more intermediaries, (i)
owns or Controls a general partnership interest or a Controlling Interest of the
limited partnership interests in Borrower (if Borrower is a partnership), (ii)
is a Manager of Borrower or owns a Controlling Interest in a manager of Borrower
or a Controlling Interest of the ownership or membership interests in Borrower
(if Borrower is a limited liability company), or (iii) owns or Controls a
Controlling Interest of any class of voting stock of Borrower (if Borrower
is a corporation).  The SPE Equity Owner, if applicable, shall be
considered a Controlling Entity for purposes of this definition.

     

    
      
        
        

      

      
        
          
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    (l)         
  “Controlling
Interest” means (i) 50 percent or more of the direct or indirect
ownership interests in an entity, or (ii) a percentage ownership interest in an
entity of less than 50 percent, if the owner(s) of that interest actually
Control(s) the business and affairs of the entity without the requirement of
consent of any other party.

     

    (m)          “Cut-off Date” is defined in
the Note.

     

    (n)           “Defeasance” is defined in
Section 44.

     

    (o)           “Defeasance Closing Date” is
defined in Section 44(b).

     

    (p)           “Defeasance Collateral” means
(i) a Freddie Mac Debt Security, (ii) a Fannie Mae Debt Security, (iii) U.S.
Treasury Obligations, or (iv) FHLB Obligations.

     

    (q)           “Defeasance Date” means the
second (2nd)
anniversary of the “startup date” of the last REMIC within the meaning of
Section 860G(a)(9) of the Tax Code which holds all or any portion of the
Loan.

     

    (r)           “Defeasance Fee” is defined in
Section 44(c).

     

    (s)           “Defeasance Notice” is defined
in Section 44(b).

     

    (t)          
 “Defeasance
Period” is defined in the Note.

     

    (u)           “Disclosure Document” is
defined in Section 39.

     

    (v)           “Eligible Account” means an
identifiable account which is separate from all other funds held by the holding
institution that is either (i) an account or accounts maintained with the
corporate trust department of a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (ii) a segregated trust account or accounts maintained with the
corporate trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity which, in the case
of a state chartered depository institution or trust company is subject to
regulations substantially similar to 12 C.F.R. §9.10(b), having in either case a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal and state authority.  An Eligible Account
will not be evidenced by a certificate of deposit, passbook or other
instrument.

     

    (w)           “Eligible Institution” means a
federal or state chartered depository institution or trust company insured by
the Federal Deposit Insurance Corporation, the short term unsecured debt
obligations or commercial paper of which are rated at least A-1 by Standard
& Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.,
P-1 by Moody’s Investors Service, Inc. and F-1 by Fitch, Inc. in the case of
accounts in which funds are held for thirty (30) days or less or, in the case of
letters of credit or accounts in which funds are held for more than thirty (30)
days, the long term unsecured debt obligations of which are rated at least “A”
by Fitch, Inc. and Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., and “A2” by Moody’s Investors Service,
Inc.  If at any time an Eligible Institution does not meet the
required rating, the Loan Servicer must move the Eligible Account within thirty
(30) days of such event to an appropriately rated Eligible
Institution.

     

    (x)           “Environmental Inspections” is
defined in Section 18(g).

     

    
      
        
        

      

      
        
          
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    (y)           “Environmental Permit” means
any permit, license, or other authorization issued under any Hazardous Materials
Law with respect to any activities or businesses conducted on or in relation to
the Mortgaged Property.

     

    (z)           “ERISA” is defined in Section
48(d).

     

    (aa)          “Event of Default” means the
occurrence of any event listed in Section 22.

     

    (bb)         “Fannie Mae Debt Security”
means any non-callable bond, debenture, note, or other similar debt obligation
issued by Federal National Mortgage Association.

     

    (cc)  “FHLB Obligations” mean direct,
non-callable and non-redeemable securities issued, or fully insured as to
payment, by any consolidated bank that is a member of the Federal Home Loan
Banks.

     

    (dd)         “First Mortgage” is defined in
Section 43(b).

     

    (ee)         “Fixtures” means all property
owned by Borrower which is so attached to the Land or the Improvements as to
constitute a fixture under applicable law, including: machinery, equipment,
engines, boilers, incinerators, installed building materials; systems and
equipment for the purpose of supplying or distributing heating, cooling,
electricity, gas, water, air, or light; antennas, cable, wiring and conduits
used in connection with radio, television, security, fire prevention, or fire
detection or otherwise used to carry electronic signals; telephone systems and
equipment; elevators and related machinery and equipment; fire detection,
prevention and extinguishing systems and apparatus; security and access control
systems and apparatus; plumbing systems; water heaters, ranges, stoves,
microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers
and other appliances; light fixtures, awnings, storm windows and storm doors;
pictures, screens, blinds, shades, curtains and curtain rods; mirrors; cabinets,
paneling, rugs and floor and wall coverings; fences, trees and plants; swimming
pools; and exercise equipment.

     

    (ff)          “Freddie Mac” is defined in
Section 43(a).

     

    (gg)         “Freddie Mac Debt Security”
means any non-callable bond, debenture, note, or other similar debt obligation
issued by Freddie Mac.

     

    (hh)         “Governmental Authority” means
any board, commission, department or body of any municipal, county, state or
federal governmental unit, or any subdivision of any of them, that has or
acquires jurisdiction over the Mortgaged Property or the use, operation or
improvement of the Mortgaged Property or over the Borrower.

     

    (ii)          “Hazard Insurance” is defined
in Section 19.

     

    (jj)          “Hazardous Materials” means
petroleum and petroleum products and compounds containing them, including
gasoline, diesel fuel and oil; explosives; flammable materials; radioactive
materials; polychlorinated biphenyls (“PCBs”) and compounds
containing them; lead and lead-based paint; asbestos or asbestos containing
materials in any form that is or could become friable; underground or
above-ground storage tanks, whether empty or containing any substance; any
substance the presence of which on the Mortgaged Property is prohibited by
any
federal, state or local authority; any substance that requires special handling
and any other material or substance now or in the future that (i)  is
defined as a “hazardous substance,” “hazardous material,” “hazardous waste,”
“toxic substance,” “toxic pollutant,” “contaminant,” or

     

    
      
        
        

      

      
        
          
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    “pollutant”
by or within the meaning of any Hazardous Materials Law, or (ii) is regulated in
any way by or within the meaning of any Hazardous Materials Law.

     

    (kk)          “Hazardous Materials Laws”
means all federal, state, and local laws, ordinances and regulations and
standards, rules, policies and other governmental requirements, administrative
rulings and court judgments and decrees in effect now or in the future and
including all amendments, that relate to Hazardous Materials or the protection
of human health or the environment and apply to Borrower or to the Mortgaged
Property. Hazardous Materials Laws include, but are not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et
seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Section 6901, et
seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean
Water Act, 33 U.S.C. Section 1251, et seq., and the
Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq., and their
state analogs.

     

    (ll)           “Impositions” and “Imposition Deposits” are
defined in Section 7(a).

     

    (mm)       “Improvements” means the
buildings, structures, improvements, and alterations now constructed or at any
time in the future constructed or placed upon the Land, including any future
replacements and additions.

     

    (nn)          “Indebtedness” means the
principal of, interest at the fixed or variable rate set forth in the Note on,
and all other amounts due at any time under, the Note, this Instrument or any
other Loan Document, including prepayment premiums, late charges, default
interest, and advances as provided in Section 12 to protect the security of this
Instrument.

     

    (oo)         “Indemnitees” is defined in
Section 18(j).

     

    (pp)          “Initial Owners” means, with
respect to Borrower or any other entity, the Persons that (i) on the date of the
Note, or (ii) on the date of a Transfer to which Lender has consented, own in
the aggregate 100 percent of the ownership interests in Borrower or that
entity.

     

    (qq)          “Intercreditor Agreement” is
defined in Section 43(b).

     

    (rr)           “Issuer Group” is defined in
Section 47.

     

    (ss)          “Issuer Person” is defined in
Section 47.

     

    (tt)           “Junior Lender” is defined in
Section 43(e).

     

    (uu)          “Land” means the land described
in Exhibit A.

     

    (vv)          “Leases” means all present and
future leases, subleases, licenses, concessions or grants or other possessory
interests now or hereafter in force, whether oral or written, covering or
affecting the Mortgaged Property, or any portion of the Mortgaged Property
(including proprietary leases or occupancy agreements if Borrower is a
cooperative housing corporation), and all modifications, extensions or
renewals.

     

    (ww)        “Lender” means the entity
identified as “Lender” in the first paragraph of this Instrument, or any
subsequent holder of the Note.

     

    (xx)         “Lien” is defined in Section
16.

     

    
      
        
        

      

      
        
          
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    (yy)          “Loan” means the loan evidenced
by the Note.

     

    (zz)          “Loan Documents” means the
Note, this Instrument, the Assignment of Management Agreement, all guaranties,
all indemnity agreements, all Collateral Agreements, O&M Programs, the MMP
and any other documents now or in the future executed by Borrower, any guarantor
or any other Person in connection with the Loan evidenced by the Note, as such
documents may be amended from time to time.

     

    (aaa)        “Loan Servicer” means the
entity that from time to time is designated by Lender or its designee to collect
payments and deposits and receive Notices under the Note, this Instrument and
any other Loan Document, and otherwise to service the Loan evidenced by the Note
for the benefit of Lender.  Unless Borrower receives Notice to the
contrary, the Loan Servicer is the entity identified as “Lender” in the first
paragraph of this Instrument.

     

    (bbb) 
      “Lockout Period” is defined in
the Note.

     

    (ccc)        “Manager” or “Managers” means a Person who
is named or designated as a manager or managing member or otherwise acts in the
capacity of a manager or managing member of a limited liability company in a
limited liability company agreement or similar instrument under which the
limited liability company is formed or operated.

     

    (ddd)        “Material Adverse Effect” is
defined in Section 48(f).

     

    (eee)        “MMP” means a moisture
management plan to control water intrusion and prevent the development of Mold
or moisture at the Mortgaged Property throughout the term of this
Instrument.  At a minimum, the MMP must contain a provision for (i)
staff training, (ii) information to be provided to tenants, (iii) documentation
of the plan, (iv) the appropriate protocol for incident response and remediation
and (v) routine, scheduled inspections of common space and unit
interiors.

     

    (fff)         “Mold” means mold, fungus,
microbial contamination or pathogenic organisms.

     

    (ggg)   
    “Mortgaged Property” means all
of Borrower’s present and future right, title and interest in and to all of the
following:

     

    
      	
               
      

            	
              (i)

            	
              the
      Land;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Improvements;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              the
      Fixtures;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              the
      Personalty;

            


    

     

    
      	
               
      

            	
              (v)

            	
              all
      current and future rights, including air rights, development rights,
      zoning rights and other similar rights or interests, easements, tenements,
      rights of way, strips and gores of land, streets, alleys, roads, sewer
      rights, 

                waters,
      watercourses, and appurtenances related to or benefiting the Land or the
      Improvements, or both, and all rights-of-way, streets, alleys and roads
      which may have been or may in the future be
  vacated;

              

            


    

     

    
      	
               
      

            	
              (vi)

            	
              all
      proceeds paid or to be paid by any insurer of the Land, the Improvements,
      the Fixtures, the Personalty or any other part of
  the

            


    

    
       

      
        
          
          

        

        
          
            
 PAGE 6

          
          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                Mortgaged
      Property, whether or not Borrower obtained the insurance pursuant to
      Lender’s requirement;

              


      

    

     

    
      	
               
      

            	
              (vii)

            	
              all
      awards, payments and other compensation made or to be made by any
      municipal, state or federal authority with respect to the Land, the
      Improvements, the Fixtures, the Personalty or any other part of the
      Mortgaged Property, including any awards or settlements resulting from
      condemnation proceedings or the total or partial taking of the Land, the
      Improvements, the Fixtures, the Personalty or any other part of the
      Mortgaged Property under the power of eminent domain or otherwise and
      including any conveyance in lieu
thereof;

            


    

     

    
      	
               
      

            	
              (viii)

            	
              all
      contracts, options and other agreements for the sale of the Land, the
      Improvements, the Fixtures, the Personalty or any other part of the
      Mortgaged Property entered into by Borrower now or in the future,
      including cash or securities deposited to secure performance by parties of
      their obligations;

            


    

     

    
      	
               
      

            	
              (ix)

            	
              all
      proceeds from the conversion, voluntary or involuntary, of any of the
      above into cash or liquidated claims, and the right to collect such
      proceeds;

            


    

     

    
      	
               
      

            	
              (x)

            	
              all
      Rents and Leases;

            


    

     

    
      	
               
      

            	
              (xi)

            	
              all
      earnings, royalties, accounts receivable, issues and profits from the
      Land, the Improvements or any other part of the Mortgaged Property, and
      all undisbursed proceeds of the Loan secured by this
      Instrument;

            


    

     

    
      	
               
      

            	
              (xii)

            	
              all
      Imposition Deposits;

            


    

     

    
      	
               
      

            	
              (xiii)

            	
              all
      refunds or rebates of Impositions by any municipal, state or federal
      authority or insurance company (other than refunds applicable to periods
      before the real property tax year in which this Instrument is
      dated);

            


    

     

    
      	
               
      

            	
              (xiv)

            	
              all
      tenant security deposits which have not been forfeited by any tenant under
      any Lease and any bond or other security in lieu of such deposits;
      and

            


    

     

    
      	
               
      

            	
              (xv)

            	
              all
      names under or by which any of the above Mortgaged Property may be
      operated or known, and all trademarks, trade names, and goodwill relating
      to any of the Mortgaged Property.

            


    

     

    (hhh)        “New Commercial Lease” is
defined in Section 4(f).

     

    (iii)          “Note” means the Multifamily
Note described on page 1 of this Instrument, including all schedules, riders,
allonges and addenda, as such Multifamily Note may be amended from time to
time.

     

    (jjj)          “Notice” is defined in Section
31(a).

     

    (kkk)        “O&M Program” is defined in
Section 18(d).

     

    
      
        
        

      

      
        
          
 PAGE 7

        
        

      

      
        
        

      

    

     

    (lll)          “Person” means any natural
person, sole proprietorship, corporation, general partnership, limited
partnership, limited liability company, limited liability limited partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or municipal government
(or any agency or political subdivision thereof), endowment fund or any other
form of entity.

     

    (mmm)    “Personalty” means
all:

     

    
      	
               
      

            	
              (i)

            	
              accounts
      (including deposit accounts) of Borrower related to the Mortgaged
      Property;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              equipment
      and inventory owned by Borrower, which are used now or in the future in
      connection with the ownership, management or operation of the Land or
      Improvements or are located on the Land or Improvements, including
      furniture, furnishings, machinery, building materials, goods, supplies,
      tools, books, records (whether in written or electronic form), and
      computer equipment (hardware and
software);

            


    

     

    
      	
               
      

            	
              (iii)

            	
              other
      tangible personal property owned by Borrower which is used now or in the
      future in connection with the ownership, management or operation of the
      Land or Improvements or is located on the Land or in the Improvements,
      including ranges, stoves, microwave ovens, refrigerators, dishwashers,
      garbage disposers, washers, dryers and other appliances (other than
      Fixtures);

            


    

     

    
      	
               
      

            	
              (iv)

            	
              any
      operating agreements relating to the Land or the
    Improvements;

            


    

     

    
      	
               
      

            	
              (v)

            	
              any
      surveys, plans and specifications and contracts for architectural,
      engineering and construction services relating to the Land or the
      Improvements;

            


    

     

    
      	
               
      

            	
              (vi)

            	
              all
      other intangible property, general intangibles and rights relating to the
      operation of, or used in connection with, the Land or the Improvements,
      including all governmental permits relating to any activities on the Land
      and including subsidy or similar payments received from any sources,
      including a governmental authority;
and

            


    

     

    
      	
               
      

            	
              (vii)

            	
              any
      rights of Borrower in or under letters of
  credit.

            


    

     

    (nnn)        “Pledge Agreement” is defined
in Section 44(f).

     

    (ooo)       “Preapproved Transfer” is
defined in Section 21(c).

     

    (ppp)        “Prior Lien” is defined in
Section 12.

     

    (qqq)        “Proceeding” means, whether
voluntary or involuntary, any case, proceeding or other action against Borrower
or any SPE Equity Owner under any existing or future law of any jurisdiction
relating to bankruptcy, insolvency, reorganization or relief of
debtors.

     

    (rrr)         “Prohibited Activities or
Conditions” is defined in Section 18(a).

     

    (sss)        “Property Jurisdiction” is
defined in Section 30(a).

     

    
      
        
        

      

      
        
          
 PAGE 8

        
        

      

      
        
        

      

    

     

    (ttt)          “Property Manager” means NTS
Development Company.

     

    (uuu)  
     “Rating Agencies” means Fitch,
Inc.; Moody’s Investors Service, Inc.; or Standard & Poor’s Ratings
Services, a division of The McGraw-Hill Companies, Inc., or any successor entity
of the foregoing, or any other nationally recognized statistical rating
organization.

     

    (vvv)        “Rating Confirmation” means a
written confirmation from each of the Rating Agencies which has rated the
Securitization which includes the Loan (unless otherwise agreed by Lender) or
any portion thereof or interest therein, that an action shall not result in a
downgrade, withdrawal or qualification of any securities issued in connection
with the Securitization, unless such Rating Agency has elected to waive its
right to issue a Rating Confirmation.

     

    (www)     “Release Instruments” is
defined in Section 44(f).

     

    (xxx)   
    “Remedial Work” is defined in
Section 18(h).

     

    (yyy)        “Rent Schedule” means a written
schedule for the Mortgaged Property showing the name of each tenant, and for
each tenant, the space occupied, the lease expiration date, the rent payable for
the current month, the date through which rent has been paid, and any related
information requested by Lender.

     

    (zzz)        “Rents” means all rents
(whether from residential or non-residential space), revenues and other income
of the Land or the Improvements, parking fees, laundry and vending machine
income and fees and charges for food, health care and other services provided at
the Mortgaged Property, whether now due, past due, or to become due, and
deposits forfeited by tenants, and, if Borrower is a cooperative housing
corporation or association, maintenance fees, charges or assessments payable by
shareholders or residents under proprietary leases or occupancy agreements,
whether now due, past due, or to become due.

     

    (aaaa)       “Required DSCR” is defined in
Section 43(b).

     

    (bbbb)      “Required LTV” is defined in
Section 43(b).

     

    (cccc)      “Restoration” is defined in
Section 19(f).

     

    (dddd)      “Scheduled Debt Payments” is
defined in Section 44(g).

     

    (eeee)  
   “Secondary
Market Transaction” means (a) any sale or assignment of this
Instrument, the Note and the other Loan Documents to one or more investors as a
whole loan; (b) a participation of the Loan to one or more investors;
(c) any deposit of this Instrument, the Note and
the other Loan Documents with a trust or other entity which may sell
certificates or other instruments to investors evidencing an ownership interest
in the assets of such trust or other entity; or (d) any other sale,
assignment or transfer of the Loan or any interest therein to one or more
investors.

     

    (ffff)        “Securities Liabilities” is
defined in Section 47.

     

    (gggg)      “Securitization” means when the
Note is assigned to a REMIC trust.

     

    (hhhh)      “Servicing Arrangement” is
defined in Section 36(b).

     

    
      
        
        

      

      
        
          
 PAGE 9

        
        

      

      
        
        

      

    

     

    (iiii)         “Single Purpose Entity” is
defined in Section 33(b).

     

    (jjjj)         “SPE Equity Owner” is NOT
APPLICABLE-Borrower shall not be required to maintain an SPE Equity Owner in its
organizational structure during the term of the Loan and all references to SPE
Equity Owner in this Instrument and in the Note shall be of no force or
effect.

     

    (kkkk)     
“Successor Borrower” is
defined in Section 44(h).

     

    (llll)         “Supplemental Mortgage” is
defined in Section 43(b).

     

    (mmmm) “Supplemental Mortgage Product”
is defined in Section 43(a).

     

    (nnnn)      “Tax Code” means the Internal
Revenue Code of the United States.

     

    (oooo)     “Taxes” means all taxes,
assessments, vault rentals and other charges, if any, whether general, special
or otherwise, including all assessments for schools, public betterments and
general or local improvements, which are levied, assessed or imposed by any
public authority or quasi-public authority, and which, if not paid, will become
a lien on the Land or the Improvements.

     

    (pppp)      “Third Party Information” is
defined in Section 47.

     

    (qqqq)      “Transfer” is defined in
Section 21.

     

    (rrrr)       
“Transfer and Assumption
Agreement” is defined in Section 44(f).

     

    (ssss)       “UCC Collateral” is defined in
Section 2.

     

    (tttt)         “Underwriter Group” is defined
in Section 47.

     

    (uuuu)      “U.S. Treasury Obligations”
means direct, non-callable and non-redeemable securities issued, or fully
insured as to payment, by the United States of America.

     

    2.           UNIFORM
COMMERCIAL CODE SECURITY AGREEMENT.

     

    (a)           This
Instrument is also a security agreement under the Uniform Commercial Code for
any of the Mortgaged Property which, under applicable law, may be subjected to a
security interest under the Uniform Commercial Code, whether such Mortgaged
Property is owned now or acquired in the future, and all products and cash and
non-cash proceeds thereof (collectively, “UCC Collateral”), and Borrower
hereby grants to Lender a security interest in the UCC Collateral.  Borrower
hereby authorizes Lender to prepare and file financing statements, continuation
statements and financing statement amendments in such form as Lender may require
to perfect or continue the perfection of this security interest and Borrower
agrees, if Lender so requests, to execute and deliver to Lender such financing
statements, continuation statements and amendments.  Borrower shall
pay all filing costs and all costs and expenses of any record searches for
financing statements and/or amendments that Lender may
require.  Without the prior written consent of Lender, Borrower shall
not create or permit to exist any other lien or security interest in any of the
UCC Collateral.

     

    (b)           Unless
Borrower gives Notice to Lender within 30 days after the occurrence of any of
the following, and executes and delivers to Lender modifications or supplements
of this Instrument (and any financing statement which may be filed in connection
with this Instrument)

     

    
      
        
        

      

      
        
          
 PAGE 10

        
        

      

      
        
        

      

    

     

    as Lender
may require, Borrower shall not (i) change its name, identity, structure or
jurisdiction of organization; (ii) change the location of its place of business
(or chief executive office if more than one place of business); or (iii) add to
or change any location at which any of the Mortgaged Property is stored, held or
located.

     

    (c)           If
an Event of Default has occurred and is continuing, Lender shall have the
remedies of a secured party under the Uniform Commercial Code, in addition to
all remedies provided by this Instrument or existing under applicable
law.  In exercising any remedies, Lender may exercise its remedies
against the UCC Collateral separately or together, and in any order, without in
any way affecting the availability of Lender’s other remedies.

     

    (d)           This
Instrument constitutes a financing statement with respect to any part of the
Mortgaged Property that is or may become a Fixture, if permitted by applicable
law.

     

    3.           ASSIGNMENT
OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.

     

    (a)           As
part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all Rents.  It is the
intention of Borrower to establish a present, absolute and irrevocable transfer
and assignment to Lender of all Rents and to authorize and empower Lender to
collect and receive all Rents without the necessity of further action on the
part of Borrower.  Promptly upon request by Lender, Borrower agrees to
execute and deliver such further assignments as Lender may from time to time
require.  Borrower and Lender intend this assignment of Rents to be
immediately effective and to constitute an absolute present assignment and not
an assignment for additional security only.  For purposes of giving
effect to this absolute assignment of Rents, and for no other purpose, Rents
shall not be deemed to be a part of the Mortgaged Property.  However,
if this present, absolute and unconditional assignment of Rents is not
enforceable by its terms under the laws of the Property Jurisdiction, then the
Rents shall be included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this Instrument create and
perfect a lien on Rents in favor of Lender, which lien shall be effective as of
the date of this Instrument.

     

    (b)           After
the occurrence of an Event of Default, Borrower authorizes Lender to collect,
sue for and compromise Rents and directs each tenant of the Mortgaged Property
to pay all Rents to, or as directed by, Lender.  However, until the
occurrence of an Event of Default, Lender hereby grants to Borrower a revocable
license to collect and receive all Rents, to hold all Rents in trust for the
benefit of Lender and to apply all Rents to pay the installments of interest and
principal then due and payable under the Note and the other amounts then due and
payable under the other Loan Documents, including Imposition Deposits, and to
pay the current costs and expenses
of managing, operating and maintaining the Mortgaged Property, including
utilities, Taxes and insurance premiums (to the extent not included in
Imposition Deposits), tenant improvements and other capital
expenditures.  So long as no Event of Default has occurred and is
continuing, the Rents remaining after application pursuant to the preceding
sentence may be retained by Borrower free and clear of, and released from,
Lender’s rights with respect to Rents under this Instrument. From and after the
occurrence of an Event of Default, and without the necessity of Lender entering
upon and taking and maintaining control of the Mortgaged Property directly, or
by a receiver, Borrower’s license to collect Rents shall automatically terminate
and Lender shall without Notice be entitled to all Rents as they become due and
payable, including Rents then due and unpaid.  Borrower shall pay to
Lender upon demand all Rents to which Lender is entitled.  At any time
on or after the date of Lender’s demand for Rents, (i) Lender may give, and
Borrower hereby irrevocably authorizes Lender to give, notice to all tenants of
the Mortgaged Property instructing them to pay all Rents to Lender, (ii) no
tenant shall be obligated

     

    
      
        
        

      

      
        
          
 PAGE 11

        
        

      

      
        
        

      

    

     

    to
inquire further as to the occurrence or continuance of an Event of Default, and
(iii) no tenant shall be obligated to pay to Borrower any amounts which are
actually paid to Lender in response to such a notice.  Any such notice
by Lender shall be delivered to each tenant personally, by mail or by delivering
such demand to each rental unit.  Borrower shall not interfere with
and shall cooperate with Lender’s collection of such Rents.

     

    (c)           Borrower
represents and warrants to Lender that Borrower has not executed any prior
assignment of Rents (other than an assignment of Rents securing any prior
indebtedness that is being assigned to Lender, or paid off and discharged with
the proceeds of the Loan evidenced by the Note), that Borrower has not
performed, and Borrower covenants and agrees that it will not perform, any acts
and has not executed, and shall not execute, any instrument which would prevent
Lender from exercising its rights under this Section 3, and that at the time of
execution of this Instrument there has been no anticipation or prepayment of any
Rents for more than two months prior to the due dates of such
Rents.  Borrower shall not collect or accept payment of any Rents more
than two months prior to the due dates of such Rents.

     

    (d)           If
an Event of Default has occurred and is continuing, Lender may, regardless of
the adequacy of Lender’s security or the solvency of Borrower and even in the
absence of waste, enter upon and take and maintain full control of the Mortgaged
Property in order to perform all acts that Lender in its discretion determines
to be necessary or desirable for the operation and maintenance of the Mortgaged
Property, including the execution, cancellation or modification of Leases, the
collection of all Rents, the making of repairs to the Mortgaged Property and the
execution or termination of contracts providing for the management, operation or
maintenance of the Mortgaged Property, for the purposes of enforcing the
assignment of Rents pursuant to Section 3(a), protecting the Mortgaged Property
or the security of this Instrument, or for such other purposes as Lender in its
discretion may deem necessary or desirable.  Alternatively, if an
Event of Default has occurred and is continuing, regardless of the adequacy of
Lender’s security, without regard to Borrower’s solvency and without the
necessity of giving prior notice (oral or written) to Borrower, Lender may apply
to any court having jurisdiction for the appointment of a receiver for the
Mortgaged Property to take any or all of the actions set forth in the preceding
sentence.  If Lender elects to seek the appointment of a receiver for
the Mortgaged Property at any time after an Event of Default has occurred and is
continuing, Borrower, by its execution of this Instrument, expressly consents to
the appointment of such receiver, including the appointment of a receiver ex parte if permitted
by applicable law.  If Borrower is a housing cooperative corporation
or association, Borrower hereby agrees that if a receiver is appointed, the
order appointing the receiver may contain a provision requiring the receiver to
pay the installments of interest and principal then due and payable under the
Note and the other amounts then due and payable under the other Loan Documents,
including Imposition Deposits, it being acknowledged
and agreed that the Indebtedness is an obligation of the Borrower and must be
paid out of maintenance charges payable by the Borrower's tenant shareholders
under their proprietary leases or occupancy agreements.  Lender or the
receiver, as the case may be, shall be entitled to receive a reasonable fee for
managing the Mortgaged Property.  Immediately upon appointment of a
receiver or immediately upon the Lender’s entering upon and taking possession
and control of the Mortgaged Property, Borrower shall surrender possession of
the Mortgaged Property to Lender or the receiver, as the case may be, and shall
deliver to Lender or the receiver, as the case may be, all documents, records
(including records on electronic or magnetic media), accounts, surveys, plans,
and specifications relating to the Mortgaged Property and all security deposits
and prepaid Rents.  In the event Lender takes possession and control
of the Mortgaged Property, Lender may exclude Borrower and its representatives
from the Mortgaged Property.  Borrower acknowledges and agrees that
the exercise by Lender of any of the rights conferred under this Section 3 shall
not be construed to make Lender a mortgagee-in-possession

     

    
      
        
        

      

      
        
          
 PAGE 12

        
        

      

      
        
        

      

    

     

    of the
Mortgaged Property so long as Lender has not itself entered into actual
possession of the Land and Improvements.

     

    (e)           If
Lender enters the Mortgaged Property, Lender shall be liable to account only to
Borrower and only for those Rents actually received.  Except to the
extent of Lender’s gross negligence or willful misconduct, Lender shall not be
liable to Borrower, anyone claiming under or through Borrower or anyone having
an interest in the Mortgaged Property, by reason of any act or omission of
Lender under Section 3(d), and Borrower hereby releases and discharges Lender
from any such liability to the fullest extent permitted by law.

     

    (f)           If
the Rents are not sufficient to meet the costs of taking control of and managing
the Mortgaged Property and collecting the Rents, any funds expended by Lender
for such purposes shall become an additional part of the Indebtedness as
provided in Section 12.

     

    (g)           Any
entering upon and taking of control of the Mortgaged Property by Lender or the
receiver, as the case may be, and any application of Rents as provided in this
Instrument shall not cure or waive any Event of Default or invalidate any other
right or remedy of Lender under applicable law or provided for in this
Instrument.

     

    4.           ASSIGNMENT
OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.

     

    (a)           As
part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all of Borrower’s right, title
and interest in, to and under the Leases, including Borrower’s right, power and
authority to modify the terms of any such Lease, or extend or terminate any such
Lease.  It is the intention of Borrower to establish a present,
absolute and irrevocable transfer and assignment to Lender of all of Borrower’s
right, title and interest in, to and under the Leases.  Borrower and
Lender intend this assignment of the Leases to be immediately effective and to
constitute an absolute present assignment and not an assignment for additional
security only.  For purposes of giving effect to this absolute
assignment of the Leases, and for no other purpose, the Leases shall not be
deemed to be a part of the Mortgaged Property.  However, if this
present, absolute and unconditional assignment of the Leases is not enforceable
by its terms under the laws of the Property Jurisdiction, then the Leases shall
be included as a part of the Mortgaged Property and it is the intention of the
Borrower that in this circumstance this Instrument create and perfect a lien on
the Leases in favor of Lender, which lien shall be effective as of the date of
this Instrument.

     

    (b)           Until
Lender gives Notice to Borrower of Lender’s exercise of its rights under this
Section 4, Borrower shall have all rights, power and authority granted to
Borrower under any Lease (except as otherwise limited by this Section or any
other provision of this Instrument), including the right, power and authority to
modify the terms of any Lease or extend or terminate any Lease.  Upon
the occurrence of an Event of Default, the permission given to Borrower pursuant
to the preceding sentence to exercise all rights, power and authority under
Leases shall automatically terminate.  Borrower shall comply with and
observe Borrower’s obligations under all Leases, including Borrower’s
obligations pertaining to the maintenance and disposition of tenant security
deposits.

     

    (c)           Borrower
acknowledges and agrees that the exercise by Lender, either directly or by a
receiver, of any of the rights conferred under this Section 4 shall not be
construed to make Lender a mortgagee-in-possession of the Mortgaged Property so
long as Lender has not itself entered into actual possession of the Land and the
Improvements.  The acceptance by Lender of the assignment of the
Leases pursuant to Section 4(a) shall not at any time or in any
event

     

    
      
        
        

      

      
        
          
 PAGE 13

        
        

      

      
        
        

      

    

     

    obligate
Lender to take any action under this Instrument or to expend any money or to
incur any expenses.  Except to the extent of Lender’s gross negligence
or willful misconduct, Lender shall not be liable in any way for any injury or
damage to person or property sustained by any Person or Persons in or about the
Mortgaged Property.  Prior to Lender’s actual entry into and taking
possession of the Mortgaged Property, Lender shall not (i) be obligated to
perform any of the terms, covenants and conditions contained in any Lease (or
otherwise have any obligation with respect to any Lease); (ii) be obligated to
appear in or defend any action or proceeding relating to the Lease or the
Mortgaged Property; or (iii) be responsible for the operation, control, care,
management or repair of the Mortgaged Property or any portion of the Mortgaged
Property.  The execution of this Instrument by Borrower shall
constitute conclusive evidence that all responsibility for the operation,
control, care, management and repair of the Mortgaged Property is and shall be
that of Borrower, prior to such actual entry and taking of
possession.

     

    (d)           Upon
delivery of Notice by Lender to Borrower of Lender’s exercise of Lender’s rights
under this Section 4 at any time after the occurrence of an Event of Default,
and without the necessity of Lender entering upon and taking and maintaining
control of the Mortgaged Property directly, by a receiver, or by any other
manner or proceeding permitted by the laws of the Property Jurisdiction, Lender
immediately shall have all rights, powers and authority granted to Borrower
under any Lease, including the right, power and authority to modify the terms of
any such Lease, or extend or terminate any such Lease.

     

    (e)           Borrower
shall, promptly upon Lender’s request, deliver to Lender an executed copy of
each residential Lease then in effect.  All Leases for residential
dwelling units shall be on forms approved by Lender, shall be for initial terms
of at least six months and not more than two years, and shall not include
options to purchase.

     

    
      	
               
      

            	
              (f)

            	
              (i)

            	
              Except
      as set forth below, Borrower shall not enter into a Lease for any portion
      of the Mortgaged Property for non-residential use without the prior
      written consent of Lender.

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Borrower
      shall not modify the terms of, or extend or terminate, any Lease for
      non-residential use (including any Lease in existence on the date of this
      Instrument) without the prior written consent of Lender; provided,
      however, Lender’s consent shall not be required for the modification or
      extension of a non-residential Lease if such modification or extension is
      on terms at least as favorable to Borrower as those customary at that time
      

                in
      the applicable market and the income from the extended or modified Lease
      will not be less than the income received from the Lease as of the date of
      this Instrument.

              

            


    

     

    
      	
               
      

            	
              (iii)

            	
              Lender’s
      consent shall not be required for Borrower to enter into a new Lease for
      space occupied as of the date of this Instrument for non-residential use
      (“New Commercial
      Lease”), provided that such New Commercial Lease satisfies the
      following requirements:

            


    

     

    
      	
               
      

            	
              (A)

            	
              the
      aggregate of the income derived from the space leased by the New
      Commercial Lease accounts for less than five percent (5%) of the gross
      income of the Mortgaged Property on the date of this
      Instrument;

            


    

     

    
      	
               
      

            	
              (B)

            	
              the
      tenant under the New Commercial Lease is not an Affiliate of the Borrower
      or any guarantor;

            


    

     

    
      
        
        

      

      
        
          
 PAGE 14

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (C)

            	
              terms
      of the New Commercial Lease are at least as favorable to Borrower as those
      customary on the date of this Instrument in the applicable
      market;

            


    

     

    
      	
               
      

            	
              (D)

            	
              the
      rents paid to the Borrower pursuant to the New Commercial Lease are
      greater than or equal to the rents paid to Borrower pursuant to the Lease
      for that portion of the Mortgaged Property that was in effect prior to the
      New Commercial Lease; and

            


    

     

    
      	
               
      

            	
              (E)

            	
              the
      New Commercial Lease must provide that the space may not be used or
      operated, in whole or in part, for any of the following:  (1)
      the operation of a so-called “head shop” or other business devoted to the
      sale of articles or merchandise normally used or associated with illegal
      or unlawful activities such as, but not limited to, the sale of
      paraphernalia used in connection with marijuana or controlled drugs or
      substances, (2) a gun shop, shooting gallery or firearms range, (3) a
      so-called massage parlor or any business which sells, rents or permits the
      viewing of so-called “adult” or pornographic materials such as, but not
      limited to, adult magazines, books, movies, photographs, sexual aids,
      sexual articles and sex paraphernalia, (4) for the sale or distribution of
      any flammable liquids, gases or other Hazardous Materials as defined under
      this Instrument, (5) an off-track betting parlor or arcade, (6) a liquor
      store or other business whose primary business is the sale of alcoholic
      beverages for off-site consumption, (7) a burlesque or strip club, or (8)
      any other illegal activity.

            


    

     

    
      	
               
      

            	
              (iv)

            	
              Borrower
      shall, without request by Lender, deliver a fully executed copy of each
      non-residential Lease to Lender promptly after such Lease is
      signed.

            


    

     

    
      	
               
      

            	
              (v)

            	
              All
      non-residential Leases, regardless of whether Lender’s consent or approval
      is required, including renewals or extensions of existing Leases, shall
      specifically provide that (A) such Leases are subordinate to the lien
      of
      this Instrument; (B) the tenant shall attorn to Lender and any purchaser
      at a foreclosure sale, such attornment to be self-executing and effective
      upon acquisition of title to the Mortgaged Property by any purchaser at a
      foreclosure sale or by Lender in any manner; (C) the tenant agrees to
      execute such further evidences of attornment as Lender or any purchaser at
      a foreclosure sale may from time to time request; (D) the Lease shall not
      be terminated by foreclosure or any other transfer of the Mortgaged
      Property; (E) after a foreclosure sale of the Mortgaged Property, Lender
      or any other purchaser at such foreclosure sale may, at Lender’s or such
      purchaser’s option, accept or terminate such Lease; and (F) upon receipt
      of a written request from Lender following the occurrence of an Event of
      Default, pay all Rents payable under the Lease to
      Lender.

            


    

     

        (g)           Borrower
shall not receive or accept Rent under any Lease (whether residential or
non-residential) for more than two months in advance.

     

    (h)           If
Borrower is a cooperative housing corporation or association, notwithstanding
anything to the contrary contained in this subsection or in Section 21, so long
as Borrower

     

    
      
        
        

      

      
        
          
 PAGE 15

        
        

      

      
        
        

      

    

     

    remains a
cooperative housing corporation or association and is not in breach of any
covenant of this Instrument, Lender hereby consents to:

    


    
      	
               
      

            	
              (i)

            	
              the
      execution of leases of apartments for a term in excess of two years from
      Borrower to a tenant shareholder of Borrower, so long as such leases,
      including proprietary leases, are and will remain subordinate to the lien
      of this Instrument; and

            


    

    


    
      	
               
      

            	
              (ii)

            	
              the
      surrender or termination of such leases of apartments where the
      surrendered or terminated lease is immediately replaced or where the
      Borrower makes its best efforts to secure such immediate replacement by a
      newly executed lease of the same apartment to a tenant shareholder of the
      Borrower.  However, no consent is hereby given by Lender to any
      execution, surrender, termination or assignment of a lease under terms
      that would waive or reduce the obligation of the resulting tenant
      shareholder under such lease to pay cooperative assessments in full when
      due or the obligation of the former tenant shareholder to pay any unpaid
      portion of such assessments.

            


    

     

    5.           PAYMENT OF INDEBTEDNESS; PERFORMANCE
UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM.  Borrower shall pay
the Indebtedness when due in accordance with the terms of the Note and the other
Loan Documents and shall perform, observe and comply with all other provisions
of the Note and the other Loan Documents.  Borrower shall pay a
prepayment premium in connection with certain prepayments of the Indebtedness,
including a payment made after Lender’s exercise of any right of acceleration of
the Indebtedness, as provided in the Note.

     

    6.           EXCULPATION.  Borrower’s
personal liability for payment of the Indebtedness and for performance of the
other obligations to be performed by it under this Instrument is limited in the
manner, and to the extent, provided in the Note.

     

    7.           DEPOSITS
FOR TAXES, INSURANCE AND OTHER CHARGES.

     

    (a)           Unless
this requirement is waived in writing by Lender, which waiver may be contained
in this Section 7(a), Borrower shall deposit with Lender on the day monthly
installments of principal or interest, or both, are due under the Note (or on
another day designated in writing by Lender), until the Indebtedness is paid in
full, an additional amount sufficient to accumulate with Lender the entire sum
required to pay, when due, the items marked “Collect” below.  Lender
will not require the Borrower to make Imposition Deposits with respect to the
items marked “Deferred” below.

     

    
      	
               
      

            	
              [Deferred]

            	
              Hazard
      Insurance premiums or other insurance premiums required by Lender under
      Section 19,

            


    

    
      	
               
      

            	
              [Collect]

            	
              Taxes,

            


    

    
      	
               
      

            	
              [Deferred]

            	
              water
      and sewer charges (that could become a lien on the Mortgaged
      Property),

            


    

    
      	
                  [N/A]

            	
              ground
      rents,

            


    

    
      	
               
      

            	
              [Deferred]

            	
              assessments
      or other charges (that could become a lien on the Mortgaged
      Property)

            


    

    


    The
amounts deposited under the preceding sentence are collectively referred to in
this Instrument as the “Imposition
Deposits.”  The obligations of Borrower for which the
Imposition

     

    
      
        
        

      

      
        
          
 PAGE 16

        
        

      

      
        
        

      

    

     

    Deposits
are required are collectively referred to in this Instrument as “Impositions.”  The
amount of the Imposition Deposits shall be sufficient to enable Lender to pay
each Imposition before the last date upon which such payment may be made without
any penalty or interest charge being added.  Lender shall maintain
records indicating how much of the monthly Imposition Deposits and how much of
the aggregate Imposition Deposits held by Lender are held for the purpose of
paying Taxes, insurance premiums and each other Imposition.

     

    (b)           Imposition
Deposits shall be deposited in an Eligible Account at an Eligible Institution
(which may be Lender, if Lender is such an institution) or invested in
“permitted investments” as then defined and required by the Rating
Agencies.  Lender shall not be obligated to open additional accounts
or deposit Imposition Deposits in additional institutions when the amount of the
Imposition Deposits exceeds the maximum amount of the federal deposit insurance
or guaranty.  Lender shall apply the Imposition Deposits to pay
Impositions so long as no Event of Default has occurred and is
continuing.  Unless applicable law requires, Lender shall not be
required to pay Borrower any interest, earnings or profits on the Imposition
Deposits.  As additional security for all of Borrower’s obligations
under this Instrument and the other Loan Documents, Borrower hereby pledges and
grants to Lender a security interest in the Imposition Deposits and all proceeds
of, and all interest and dividends on, the Imposition Deposits.  Any
amounts deposited with Lender under this Section 7 shall not be trust funds, nor
shall they operate to reduce the Indebtedness, unless applied by Lender for that
purpose under Section 7(e).

     

    (c)           If
Lender receives a bill or invoice for an Imposition, Lender shall pay the
Imposition from the Imposition Deposits held by Lender.  Lender shall
have no obligation to pay any Imposition to the extent it exceeds Imposition
Deposits then held by Lender.  Lender may pay an Imposition according
to any bill, statement or estimate from the appropriate public office or
insurance company without inquiring into the accuracy of the bill, statement or
estimate or into the validity of the Imposition.

     

    (d)           If
at any time the amount of the Imposition Deposits held by Lender for payment of
a specific Imposition exceeds the amount reasonably deemed necessary by Lender,
the excess shall be
credited against future installments of Imposition Deposits.  If at
any time the amount of the Imposition Deposits held by Lender for payment of a
specific Imposition is less than the amount reasonably estimated by Lender to be
necessary, Borrower shall pay to Lender the amount of the deficiency within 15
days after Notice from Lender.

     

    (e)           If
an Event of Default has occurred and is continuing, Lender may apply any
Imposition Deposits, in any amounts and in any order as Lender determines, in
Lender’s discretion, to pay any Impositions or as a credit against the
Indebtedness. Upon payment in full of the Indebtedness, Lender shall refund to
Borrower any Imposition Deposits held by Lender.

     

    (f)           If
Lender does not collect an Imposition Deposit with respect to an Imposition
either marked “Deferred” in Section 7(a) or pursuant to a separate written
waiver by Lender, then on or before the date each such Imposition is due, or on
the date this Instrument requires each such Imposition to be paid, Borrower must
provide Lender with proof of payment of each such Imposition for which Lender
does not require collection of Imposition Deposits.  Lender may revoke
its deferral or waiver and require Borrower to deposit with Lender any or all of
the Imposition Deposits listed in Section 7(a), regardless of whether any such
item is marked “Deferred” in such section, upon Notice to Borrower, (i) if
Borrower does not timely pay any of the Impositions, (ii) if Borrower fails to
provide timely proof to Lender of such payment, or (iii) at any time during the
existence of an Event of Default.

     

    
      
        
        

      

      
        
          
 PAGE 17

        
        

      

      
        
        

      

    

     

    (g)           In
the event of a Transfer prohibited by or requiring Lender’s approval under
Section 21, Lender’s waiver of the collection of any Imposition Deposit in this
Section 7 may be modified or rendered void by Lender at Lender’s option by
Notice to Borrower and the transferee(s) as a condition of Lender’s approval of
such Transfer.

     

    8.           COLLATERAL
AGREEMENTS.  Borrower shall deposit with Lender such amounts as
may be required by any Collateral Agreement and shall perform all other
obligations of Borrower under each Collateral Agreement.

     

    9.           APPLICATION OF
PAYMENTS.  If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, then Lender may apply that payment to
amounts then due and payable in any manner and in any order determined by
Lender, in Lender’s discretion.  Neither Lender’s acceptance of an
amount that is less than all amounts then due and payable nor Lender’s
application of such payment in the manner authorized shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.  Notwithstanding the application of any such amount to
the Indebtedness, Borrower’s obligations under this Instrument and the Note
shall remain unchanged.

     

    10.           COMPLIANCE WITH LAWS AND ORGANIZATIONAL
DOCUMENTS.

     

    (a)           Borrower
shall comply with all laws, ordinances, regulations and requirements of any
Governmental Authority and all recorded lawful covenants and agreements relating
to or affecting the Mortgaged Property, including all laws, ordinances,
regulations, requirements and covenants pertaining to health and safety,
construction of improvements on the Mortgaged Property, fair housing, disability
accommodation, zoning and land use, and Leases.  Borrower also shall
comply with all applicable laws that pertain to the maintenance and disposition
of tenant security deposits.

     

    (b)           Borrower
shall at all times maintain records sufficient to demonstrate compliance with
the provisions of this Section 10.

     

    (c)           Borrower
shall take appropriate measures to prevent, and shall not engage in or knowingly
permit, any illegal activities at the Mortgaged Property that could endanger
tenants or visitors, result in damage to the Mortgaged Property, result in
forfeiture of the Mortgaged Property, or otherwise materially impair the lien
created by this Instrument or Lender’s interest in the Mortgaged
Property.  Borrower represents and warrants to Lender that no portion
of the Mortgaged Property has been or will be purchased with the proceeds of any
illegal activity.

     

    (d)           Borrower
shall at all times comply with all laws, regulations and requirements of any
Governmental Authority relating to Borrower's formation, continued existence and
good standing in the Property Jurisdiction.  Borrower shall at all
times comply with its organizational documents, including but not limited to its
partnership agreement (if Borrower is a partnership), its by-laws (if Borrower
is a corporation or housing cooperative corporation or association) or its
operating agreement (if Borrower is an limited liability company or
tenancy-in-common).  If Borrower is a housing cooperative corporation
or association, Borrower shall at all times maintain its status as a
"cooperative housing corporation" as such term is defined in Section 216(b) of
the Internal revenue Code of 1986, as amended, or any successor statute
thereto.

     

    (e)           Borrower
represents and warrants that Borrower, any commercial tenant of the Mortgaged
Property and/or any operator of the Mortgaged Property were in possession of all
material licenses, permits and authorizations required for use of the Mortgaged
Property which

     

    
      
        
        

      

      
        
          
 PAGE 18

        
        

      

      
        
        

      

    

     

    were
valid and in full force and effect as of the date of this
Instrument.  Borrower warrants that it, any commercial tenant of the
Mortgaged Property and/or any operator of the Mortgaged Property shall remain in
material compliance with all material licenses, permits and other legal
requirements necessary and required to conduct its business.

     

    11.           USE OF
PROPERTY.  Unless required by applicable law, Borrower shall
not (a) allow changes in the use for which all or any part of the Mortgaged
Property is being used at the time this Instrument was executed, except for any
change in use approved by Lender, (b) convert any individual dwelling units or
common areas to commercial use, (c) initiate a change in the zoning
classification of the Mortgaged Property or acquiesce without Notice to and
consent of Lender in a change in the zoning classification of the Mortgaged
Property, (d) establish any condominium or cooperative regime with respect to
the Mortgaged Property, (e) combine all or any part of the Mortgaged Property
with all or any part of a tax parcel which is not part of the Mortgaged
Property, or (f) subdivide or otherwise split any tax parcel constituting all or
any part of the Mortgaged Property without the prior consent of
Lender.  The Mortgaged Property (x) permits ingress and egress, (y) is
served by public utilities and services generally available in the surrounding
community or otherwise appropriate for the use in which the Mortgaged Property
is currently being utilized, and (z) constitutes one or more separate tax
parcels or the Lender’s title policy contains one or more endorsements with
respect to the matters described in (x) or (z).  Notwithstanding
anything contained in this Section to the contrary, if Borrower is a housing
cooperative corporation or association, Lender acknowledges and consents to
Borrower's use of the Mortgaged Property as a housing cooperative.

     

    12.           PROTECTION
OF LENDER’S SECURITY; INSTRUMENT SECURES FUTURE ADVANCES.

     

    (a)           If
Borrower fails to perform any of its obligations under this Instrument or any
other Loan Document, or if any action or proceeding is commenced which purports
to affect the Mortgaged
Property, Lender’s security or Lender’s rights under this Instrument, including
eminent domain, insolvency, code enforcement, civil or criminal forfeiture,
enforcement of Hazardous Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a bankrupt or decedent, then Lender at
Lender’s option may make such appearances, file such documents, disburse such
sums and take such actions as Lender reasonably deems necessary to perform such
obligations of Borrower and to protect Lender’s interest, including (i) payment
of Attorneys’ Fees and Costs, (ii) payment of fees and out-of-pocket expenses of
accountants, inspectors and consultants, (iii) entry upon the Mortgaged Property
to make repairs or secure the Mortgaged Property, (iv) procurement of the
insurance required by Section 19, (v) payment of amounts which Borrower has
failed to pay under Sections 15 and 17, and (vi) advances made by Lender to pay,
satisfy or discharge any obligation of Borrower for the payment of money that is
secured by a pre-existing mortgage, deed of trust or other lien encumbering the
Mortgaged Property (a "Prior
Lien").

     

    (b)           Any
amounts disbursed by Lender under this Section 12, or under any other provision
of this Instrument that treats such disbursement as being made under this
Section 12, shall be secured by this Instrument, shall be added to, and become
part of, the principal component of the Indebtedness, shall be immediately due
and payable and shall bear interest from the date of disbursement until paid at
the “Default Rate,” as
defined in the Note.

     

    (c)           Nothing
in this Section 12 shall require Lender to incur any expense or take any
action.

     

    13.           INSPECTION.

     

    
      
        
        

      

      
        
          
 PAGE 19

        
        

      

      
        
        

      

    

     

    (a)           Lender,
its agents, representatives, and designees may make or cause to be made entries
upon and inspections of the Mortgaged Property (including environmental
inspections and tests) during normal business hours, or at any other reasonable
time, upon reasonable notice to Borrower if the inspection is to include
occupied residential units (which notice need not be in
writing).  Notice to Borrower shall not be required in the case of an
emergency, as determined in Lender’s discretion, or when an Event of Default has
occurred and is continuing.

     

    (b)           If
Lender determines that Mold has developed as a result of a water intrusion event
or leak, Lender, at Lender’s discretion, may require that a professional
inspector inspect the Mortgaged Property as frequently as Lender determines is
necessary until any issue with Mold and its cause(s) are resolved to Lender’s
satisfaction.  Such inspection shall be limited to a visual and
olfactory inspection of the area that has experienced the Mold, water intrusion
event or leak.  Borrower shall be responsible for the cost of such
professional inspection and any remediation deemed to be necessary as a result
of the professional inspection.  After any issue with Mold, water
intrusion or leaks is remedied to Lender’s satisfaction, Lender shall not
require a professional inspection any more frequently than once every three
years unless Lender is otherwise aware of Mold as a result of a subsequent water
intrusion event or leak.

     

    (c)           If
Lender or Loan Servicer determines not to conduct an annual inspection of the
Mortgaged Property, and in lieu thereof Lender requests a certification,
Borrower shall be prepared to provide and must actually provide to Lender a
factually correct certification each year that the annual inspection is waived
to the following effect:

     

    Borrower
has not received any written complaint, notice, letter or other written
communication from tenants, management agent or governmental authorities
regarding mold, fungus, microbial contamination
or pathogenic organisms (“Mold”) or any activity, condition, event or omission
that causes or facilitates the growth of Mold on or in any part of the Mortgaged
Property or if Borrower has received any such written complaint, notice, letter
or other written communication that Borrower has investigated and determined
that no Mold activity, condition or event exists or alternatively
has  fully and properly remediated such activity, condition, event or
omission in compliance with the Moisture Management Plan for the Mortgaged
Property.

     

    If
Borrower is unwilling or unable to provide such certification, Lender may
require a professional inspection of the Mortgaged Property at Borrower’s
expense.

     

    14.           BOOKS
AND RECORDS; FINANCIAL REPORTING.

     

    (a)           Borrower
shall keep and maintain at all times at the Mortgaged Property or the management
agent’s office, and upon Lender’s request shall make available at the Mortgaged
Property (or, at Borrower’s option, at the management agent’s office), complete
and accurate books of account and records (including copies of supporting bills
and invoices) adequate to reflect correctly the operation of the Mortgaged
Property, in accordance with GAAP consistently applied (or such other method
which is reasonably acceptable to Lender), and copies of all written contracts,
Leases, and other instruments which affect the Mortgaged
Property.  The books, records, contracts, Leases and other instruments
shall be subject to examination and inspection by Lender at any reasonable
time.

     

    (b)           Borrower
shall furnish to Lender each of the following:

     

    
      
        
        

      

      
        
          
 PAGE 20

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (i)

            	
              if,
      in connection with this Loan, the Borrower purchased the Mortgaged
      Property, a statement of income and expenses for Borrower’s operation of
      the Mortgaged Property from the origination date to the end of the first
      full calendar quarter following such origination date, such statement to
      be provided within twenty-five (25) days after the end of such quarter;
      or

            


    

     

    
      	
               
      

            	
              (ii)

            	
              for
      all other cases (for example, a refinance of a loan, a purchase of
      partnership or other interests, or new debt being placed on the Mortgaged
      Property), a statement of income and expenses for Borrower’s operation of
      the Mortgaged Property for the trailing six (6) months, such statement to
      be provided within twenty-five (25) days after the end of such
      quarter.

            


    

     

    
      	
               
      

            	
              (iii)

            	
              after
      Borrower has furnished such statements required by Section 14(b)(i) or
      (ii) above, within twenty-five (25) days after the end of each subsequent
      calendar quarter of Borrower,

            


    

     

    
      	
               
      

            	
              (A)

            	
              a
      Rent Schedule; and

            


    

     

    
      	
               
      

            	
              (B)

            	
              a
      statement of income and expenses for Borrower’s operation of the Mortgaged
      Property for that calendar quarter;

            


    

     

    (c)           Within
ninety (90) days after the end of each fiscal year of Borrower, Borrower shall
furnish to Lender each of the following:

    
       

      
        	
                 
      

              	
                (i)

              	
                an
      annual statement of income and expenses for Borrower’s operation of the
      Mortgaged Property for that fiscal
year;

              


      

    

     

    
      	
               
      

            	
              (ii)

            	
              a
      statement of changes in financial position of Borrower relating to the
      Mortgaged Property for that fiscal
year;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              a
      balance sheet showing all assets and liabilities of Borrower relating to
      the Mortgaged Property as of the end of that fiscal year and a profit and
      loss statement for Borrower; and

            


    

     

    
      	
               
      

            	
              (iv)

            	
              an
      accounting of all security deposits held pursuant to all Leases, including
      the name of the institution (if any) and the names and identification
      numbers of the accounts (if any) in which such security deposits are held
      and the name of the person to contact at such financial institution, along
      with any authority or release necessary for Lender to access information
      regarding such accounts.

            


    

     

    (d)           Borrower
shall furnish to Lender each of the following:

     

    
      	
               
      

            	
              (i)

            	
              prior
      to a Securitization, and thereafter upon Lender’s reasonable request, a
      monthly Rent Schedule and a monthly statement of income and expenses for
      Borrower’s operation of the Mortgaged
Property;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              prior
      to a Securitization, and thereafter upon Lender’s reasonable request,
      Borrower shall furnish to Lender a statement that identifies all owners of
      any interest in Borrower and any Controlling Entity and the interest held
      by each (unless Borrower or any Controlling Entity is a publicly-traded
      entity in which case such statement of ownership shall not be required),
      

            


    

    
       

      
        
          
          

        

        
          
            
 PAGE 21

          
          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                and
      if Borrower or a Controlling Entity is a corporation, all officers and
      directors of Borrower and the Controlling Entity, and if Borrower or a
      Controlling Entity is a limited liability company, all Managers who are
      not members;

              


      

    

     

    
      	
               
      

            	
              (iii)

            	
              copies
      of all tax returns filed by Borrower, within thirty (30) days after the
      date of filing; and

            


    

     

    
      	
               
      

            	
              (iv)

            	
              such
      other financial information or property management information (including,
      without limitation, information on tenants under Leases to the extent such
      information is available to Borrower, copies of bank account statements
      from financial institutions where funds owned or controlled by Borrower
      are maintained, and an accounting of security deposits) as may be required
      by Lender from time to time.

            


    

     

    (e)           At
any time upon Lender’s request, Borrower shall furnish to Lender a monthly
property management report for the Mortgaged Property, showing the number of
inquiries made and rental applications received from tenants or prospective
tenants and deposits received from tenants and any other information requested
by Lender.  However, Lender shall not require the foregoing more
frequently than quarterly except when there has been an Event of Default and
such Event of Default is continuing, in which case Lender may require Borrower
to furnish the foregoing more frequently.

     

    (f)           A
natural person having authority to bind Borrower (or the SPE Equity Owner or
guarantor, as applicable) shall certify each of the statements, schedules and
reports required by Sections 14(b) through 14(e) and 14(h) to be complete and
accurate.  Each of the statements, schedules and reports required by
Sections 14(b) through 14(e) and 14(h) shall be in such form and contain such
detail as Lender may reasonably require.  Lender also may require that
any of the statements, schedules or reports listed in Section 14(b) through
14(c) and Section 14(d)(i) and (iv) be audited at Borrower’s expense by
independent certified public accountants acceptable to Lender, at any time when
an Event of Default has occurred and is continuing or at any time that Lender,
in its reasonable judgment, determines that audited financial statements are
required for an accurate assessment of the financial condition of Borrower or of
the Mortgaged Property.

     

    (g)           If
Borrower fails to provide in a timely manner the statements, schedules and
reports required by Sections 14(b) through 14(e) and 14(h), Lender shall give
Borrower Notice specifying the statements, schedules and reports required by
Section 14(b) through 14(e) and 14(h) that Borrower has failed to
provide.  If Borrower has not provided the required statements,
schedules and reports within 10 Business Days following such Notice, then Lender
shall have the right to have Borrower’s books and records audited, at Borrower’s
expense, by independent certified public accountants selected by Lender in order
to obtain such statements, schedules and reports, and all related costs and
expenses of Lender shall become immediately due and payable and shall become an
additional part of the Indebtedness as provided in Section 12.  Notice
to Borrower shall not be required in the case of an emergency, as determined in
Lender’s discretion, or when an Event of Default has occurred and is
continuing.

     

    (h)           Borrower
shall cause each guarantor and, at Lender’s request, any SPE Equity Owner, to
provide to Lender (i) within ninety (90) days after the close of such party’s
fiscal year, such party’s balance sheet and profit and loss statement (or if
such party is a natural person, within ninety (90) days after the close of each
calendar year, such party’s personal financial statements) in form reasonably
satisfactory to Lender and certified by such party to be accurate and complete;
and (ii) such additional financial information (including, without limitation,
copies

     

    
      
        
        

      

      
        
          
 PAGE 22

        
        

      

      
        
        

      

    

     

    of state
and federal tax returns with respect to any SPE Equity Owner but Lender shall
only require copies of such tax returns with respect to each guarantor if an
Event of Default has occurred and is continuing) as Lender may reasonably
require from time to time and in such detail as reasonably required by
Lender.

     

    (i)           If
an Event of Default has occurred and is continuing, Borrower shall deliver to
Lender upon written demand all books and records relating to the Mortgaged
Property or its operation.

     

    (j)           Borrower
authorizes Lender to obtain a credit report on Borrower at any
time.

     

    15.           TAXES;
OPERATING EXPENSES.

     

    (a)           Subject
to the provisions of Section 15(c) and Section 15(d), Borrower shall pay, or
cause to be paid, all Taxes when due and before the addition of any interest,
fine, penalty or cost for nonpayment.

     

    (b)           Subject
to the provisions of Section 15(c), Borrower shall (i) pay the expenses of
operating, managing, maintaining and repairing the Mortgaged Property (including
utilities, repairs and replacements) before the last date upon which each such
payment may be made without any penalty or interest charge being added, and (ii)
pay insurance premiums at least 30 days
prior to the expiration date of each policy of insurance, unless applicable law
specifies some lesser period.

     

    (c)           If
Lender is collecting Imposition Deposits, to the extent that Lender holds
sufficient Imposition Deposits for the purpose of paying a specific Imposition,
then Borrower shall not be obligated to pay such Imposition, so long as no Event
of Default exists and Borrower has timely delivered to Lender any bills or
premium notices that it has received.  If an Event of Default exists,
Lender may exercise any rights Lender may have with respect to Imposition
Deposits without regard to whether Impositions are then due and
payable.  Lender shall have no liability to Borrower for failing to
pay any Impositions to the extent that (i) any Event of Default has occurred and
is continuing, (ii) insufficient Imposition Deposits are held by Lender at the
time an Imposition becomes due and payable or (iii) Borrower has failed to
provide Lender with bills and premium notices as provided above.

     

    (d)           Borrower,
at its own expense, may contest by appropriate legal proceedings, conducted
diligently and in good faith, the amount or validity of any Imposition other
than insurance premiums, if (i) Borrower notifies Lender of the commencement or
expected commencement of such proceedings, (ii) the Mortgaged Property is not in
danger of being sold or forfeited, (iii) if Borrower has not already paid the
Imposition, Borrower deposits with Lender reserves sufficient to pay the
contested Imposition, if requested by Lender, and (iv) Borrower furnishes
whatever additional security is required in the proceedings or is reasonably
requested by Lender.

     

    (e)           Borrower
shall promptly deliver to Lender a copy of all notices of, and invoices for,
Impositions, and if Borrower pays any Imposition directly, Borrower shall
furnish to Lender, on or before the date this Instrument requires such
Impositions to be paid, receipts evidencing that such payments were
made.

     

    16.           LIENS;
ENCUMBRANCES.  Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage, deed
of trust, deed to secure debt, security interest or other lien or encumbrance (a
“Lien”) on the Mortgaged
Property

     

    
      
        
        

      

      
        
          
 PAGE 23

        
        

      

      
        
        

      

    

     

    (other
than the lien of this Instrument) or on certain ownership interests in Borrower,
whether voluntary, involuntary or by operation of law, and whether or not such
Lien has priority over the lien of this Instrument, is a “Transfer” which constitutes an
Event of Default and subjects Borrower to personal liability under the
Note.

     

    17.           PRESERVATION,
MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.

     

    (a)           Borrower
shall not commit waste or permit impairment or deterioration of the Mortgaged
Property.

     

    (b)           Borrower
shall not abandon the Mortgaged Property.

     

    (c)           Borrower
shall restore or repair promptly, in a good and workmanlike manner, any damaged
part of the Mortgaged Property to the equivalent of its original condition, or
such other condition as Lender may approve in writing, whether or not insurance
proceeds or condemnation awards are available to cover any costs of such
restoration or repair; however, Borrower shall not be obligated to perform such
restoration or repair if (i) no Event of Default has occurred and is continuing,
and (ii) Lender has elected to apply any available insurance proceeds
and/or condemnation awards to the payment of Indebtedness pursuant to Section
19(h)(ii) through (viii), or pursuant to Section 20(d)(ii) through
(viii).

     

    (d)           Borrower
shall keep the Mortgaged Property in good repair, including the replacement of
Personalty and Fixtures with items of equal or better function and
quality.

     

    (e)           Borrower
shall provide for professional management of the Mortgaged Property by the
Property Manager or by a residential rental property manager satisfactory to
Lender at all times under a property management agreement approved by Lender in
writing. Borrower shall not surrender, terminate, cancel, modify, renew or
extend its property management agreement, or enter into any other agreement
relating to the management or operation of the Property with Property Manager or
any other Person, or consent to the assignment by the Property Manager of its
interest under such property management agreement, in each case without the
consent of Lender, which consent shall not be unreasonably withheld; provided,
however, with respect to a new property manager such consent may be conditioned
upon Borrower delivering a Rating Confirmation as to such new property manager
and the related property management agreement.  If at any time Lender
consents to the appointment of a new property manager, such new property manager
and Borrower shall, as a condition of Lender’s consent, execute an assignment of
management agreement in a form acceptable to Lender.  If any such
replacement property manager is an Affiliate of Borrower, and if a
nonconsolidation opinion was delivered at the origination of the Loan, Borrower
shall deliver to Lender an updated nonconsolidation opinion in form and
substance satisfactory to the Rating Agencies (unless waived by the Rating
Agencies) with regard to nonconsolidation.

     

    (f)           Borrower
shall give Notice to Lender of and, unless otherwise directed in writing by
Lender, shall appear in and defend any action or proceeding purporting to affect
the Mortgaged Property, Lender’s security or Lender’s rights under this
Instrument.  Borrower shall not (and shall not permit any tenant or
other person to) remove, demolish or alter the Mortgaged Property or any part of
the Mortgaged Property, including any removal, demolition or alteration
occurring in connection with a rehabilitation of all or part of the Mortgaged
Property, except (i) in connection with the replacement of tangible Personalty,
(ii) if Borrower is a cooperative housing corporation or association, to the
extent permitted with respect to individual dwelling

    
       

      
        
          
          

        

        
          
            
 PAGE 23

          
          

        

        
          
          

        

      

    

     

    units
under the form of proprietary lease or occupancy agreement and (iii) repairs and
replacements in connection with making an individual unit ready for a new
occupant.

     

    (g)           Unless
otherwise waived by Lender in writing, Borrower must have or must establish and
must adhere to the MMP.  If the Borrower is required to have an MMP,
the Borrower must keep all MMP documentation at the Mortgaged Property or at the
management agent’s office and available for the Lender or the Loan Servicer to
review during any annual assessment or other inspection of the Mortgaged
Property that is required by Lender.

     

    (h)           If
Borrower is a housing cooperative corporation or association, until the
Indebtedness is paid in full Borrower shall not reduce the maintenance fees,
charges or assessments payable by shareholders or residents under proprietary
leases or occupancy agreements below a level which is sufficient to pay all
expenses of the Borrower, including, without limitation, all operating and other
expenses for the Mortgaged Property and all payments due pursuant to the terms
of the Note and any Loan Documents.

     

    18.           ENVIRONMENTAL
HAZARDS.

     

    (a)           Except
for matters described in Section 18(b), Borrower shall not cause or permit any
of the following:

     

    
      	
               
      

            	
              (i)

            	
              the
      presence, use, generation, release, treatment, processing, storage
      (including storage in above ground and underground storage tanks),
      handling, or disposal of any Hazardous Materials on or under the Mortgaged
      Property;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      transportation of any Hazardous Materials to, from, or across the
      Mortgaged Property;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              any
      occurrence or condition on the Mortgaged Property, which occurrence or
      condition is or may be in violation of Hazardous Materials
      Laws;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              any
      violation of or noncompliance with the terms of any Environmental Permit
      with respect to the Mortgaged Property;
or

            


    

     

    
      	
               
      

            	
              (v)

            	
              any
      violation or noncompliance with the terms of any O&M Program as
      defined in subsection (d).

            


    

     

    The
matters described in clauses (i) through (v) above, except as otherwise provided
in Section 18(b), are referred to collectively in this Section 18 as “Prohibited Activities or
Conditions.”

     

    (b)           Prohibited
Activities or Conditions shall not include lawful conditions permitted by an
O&M Program or the safe and lawful use and storage of quantities of (i)
pre-packaged supplies, cleaning materials and petroleum products customarily
used in the operation and maintenance of comparable multifamily properties, (ii)
cleaning materials, personal grooming items and other items sold in pre-packaged
containers for consumer use and used by tenants and occupants of residential
dwelling units in the Mortgaged Property; and (iii) petroleum products used in
the operation and maintenance of motor vehicles from time to time located on the
Mortgaged Property’s parking areas, so long as all of the foregoing are used,
stored, handled, transported and disposed of in compliance with Hazardous
Materials Laws.

     

    
      
        
        

      

      
        
          
 PAGE 25

        
        

      

      
        
        

      

    

     

    (c)           Borrower
shall take all commercially reasonable actions (including the inclusion of
appropriate provisions in any Leases executed after the date of this Instrument)
to prevent its employees, agents, and contractors, and all tenants and other
occupants from causing or permitting any Prohibited Activities or
Conditions.  Borrower shall not lease or allow the sublease or use of
all or any portion of the Mortgaged Property to any tenant or subtenant for
nonresidential use by any user that, in the ordinary course of its business,
would cause or permit any Prohibited Activity or Condition.

     

    (d)           As
required by Lender, Borrower shall also have established a written operations
and maintenance program with respect to certain Hazardous
Materials.  Each such operations and maintenance program and any
additional or revised operations and maintenance programs established for the
Mortgaged Property pursuant to this Section 18 must be approved by Lender and
shall be referred to herein as an “O&M
Program.”  Borrower shall comply in a timely manner with, and
cause all employees, agents, and contractors of Borrower and any other Persons
present on the Mortgaged Property to comply with each O&M
Program.  Borrower shall pay all costs of performance of Borrower’s
obligations under any O&M Program, and Lender’s out of pocket costs incurred
in connection with the monitoring and review of each O&M Program and
Borrower’s performance shall be paid by Borrower upon demand by
Lender.  Any such
out-of-pocket costs of Lender that Borrower fails to pay promptly shall become
an additional part of the Indebtedness as provided in Section 12.

     

    (e)           Borrower
represents and warrants to Lender that, except as previously disclosed by
Borrower to Lender in writing (which written disclosure may be in certain
environmental assessments and other written reports accepted by Lender in
connection with the funding of the Indebtedness and dated prior to the date of
this Instrument):

     

    
      	
               
      

            	
              (i)

            	
              Borrower
      has not at any time engaged in, caused or permitted any Prohibited
      Activities or Conditions on the Mortgaged
  Property;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              to
      the best of Borrower’s knowledge after reasonable and diligent inquiry, no
      Prohibited Activities or Conditions exist or have existed on the Mortgaged
      Property;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              the
      Mortgaged Property does not now contain any underground storage tanks,
      and, to the best of Borrower’s knowledge after reasonable and diligent
      inquiry, the Mortgaged Property has not contained any underground storage
      tanks in the past.  If there is an underground storage tank
      located on the Mortgaged Property that has been previously disclosed by
      Borrower to Lender in writing, that tank complies with all requirements of
      Hazardous Materials Laws;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              to
      the best of Borrower’s knowledge after reasonable and diligent inquiry,
      Borrower has complied with all Hazardous Materials Laws, including all
      requirements for notification regarding releases of Hazardous
      Materials.  Without limiting the generality of the foregoing,
      Borrower has obtained all Environmental Permits required for the operation
      of the Mortgaged Property in accordance with Hazardous Materials Laws now
      in effect and all such Environmental Permits are in full force and
      effect;

            


    

     

    
      	
               
      

            	
              (v)

            	
              to
      the best of Borrower’s knowledge after reasonable and diligent inquiry, no
      event has occurred with respect to the Mortgaged Property
that

               

            


    

     

    
      
        
        

      

      
        
          
 PAGE 26

        
        

      

      
        
        

      

    

    
       

      
        	
                 
      

              	
                 

              	
                constitutes,
      or with the passing of time or the giving of notice would constitute,
      noncompliance with the terms of any Environmental
  Permit;

              


      

    

     

    
      	
               
      

            	
              (vi)

            	
              there
      are no actions, suits, claims or proceedings pending or, to the best of
      Borrower’s knowledge after reasonable and diligent inquiry, threatened
      that involve the Mortgaged Property and allege, arise out of, or relate to
      any Prohibited Activity or Condition;
and

            


    

     

    
      	
               
      

            	
              (vii)

            	
              Borrower
      has not received any written complaint, order, notice of violation or
      other communication from any Governmental Authority with regard to air
      emissions, water discharges, noise emissions or Hazardous Materials, or
      any other environmental, health or safety matters affecting the Mortgaged
      Property.

            


    

     

    (f)           Borrower
shall promptly notify Lender in writing upon the occurrence of any of the
following events:

     

    
      	
               
      

            	
              (i)

            	
              Borrower’s
      discovery of any Prohibited Activity or
  Condition;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Borrower’s
      receipt of or knowledge of any written complaint, order, notice of
      violation or other communication from any tenant, management agent,
      Governmental Authority or other Person with regard to present or future
      alleged Prohibited Activities or Conditions, or any other environmental,
      health or safety matters affecting the Mortgaged Property;
    or

            


    

     

    
      	
               
      

            	
              (iii)

            	
              Borrower’s
      breach of any of its obligations under this Section
  18.

            


    

     

    Any such
notice given by Borrower shall not relieve Borrower of, or result in a waiver
of, any obligation under this Instrument, the Note, or any other Loan
Document.

     

    (g)           Borrower
shall pay promptly the costs of any environmental inspections, tests or audits,
a purpose of which is to identify the extent or cause of or potential for a
Prohibited Activity or Condition (“Environmental Inspections”),
required by Lender in connection with any foreclosure or deed in lieu of
foreclosure, or as a condition of Lender’s consent to any Transfer under Section
21, or required by Lender following a reasonable determination by Lender that
Prohibited Activities or Conditions may exist.  Any such costs
incurred by Lender (including Attorneys’ Fees and Costs and the costs of
technical consultants whether incurred in connection with any judicial or
administrative process or otherwise) that Borrower fails to pay promptly shall
become an additional part of the Indebtedness as provided in Section
12.  As long as (i) no Event of Default has occurred and is
continuing, (ii) Borrower has actually paid for or reimbursed Lender for all
costs of any such Environmental Inspections performed or required by Lender, and
(iii) Lender is not prohibited by law, contract or otherwise from doing so,
Lender shall make available to Borrower, without representation of any kind,
copies of Environmental Inspections prepared by third parties and delivered to
Lender.  Lender hereby reserves the right, and Borrower hereby
expressly authorizes Lender, to make available to any party, including any
prospective bidder at a foreclosure sale of the Mortgaged Property, the results
of any Environmental Inspections made by or for Lender with respect to the
Mortgaged Property.  Borrower consents to Lender notifying any party
(either as part of a notice of sale or otherwise) of the results of any
Environmental Inspections made by or for Lender.  Borrower
acknowledges that Lender cannot control or otherwise assure the truthfulness or
accuracy of the results of any Environmental Inspections and that the release of
such results to prospective bidders at a foreclosure sale of the Mortgaged
Property may have a material and adverse effect upon the

     

    
      
        
        

      

      
        
          
 PAGE 27

        
        

      

      
        
        

      

    

     

    amount
that a party may bid at such sale.  Borrower agrees that Lender shall
have no liability whatsoever as a result of delivering the results to any third
party of any Environmental Inspections made by or for Lender, and Borrower
hereby releases and forever discharges Lender from any and all claims, damages,
or causes of action, arising out of, connected with or incidental to the results
of, the delivery of any of Environmental Inspections made by or for
Lender.

     

    (h)           If
any investigation, site monitoring, containment, clean-up, restoration or other
remedial work (“Remedial
Work”) is necessary to comply with any Hazardous Materials Law or order
of any Governmental Authority that has or acquires jurisdiction over the
Mortgaged Property or the use, operation or improvement of the Mortgaged
Property, or is otherwise required by Lender as a consequence of any Prohibited
Activity or Condition or to prevent the occurrence of a Prohibited Activity or
Condition, Borrower shall, by the earlier of (i) the applicable deadline
required by Hazardous Materials Law or (ii) 30 days after Notice from Lender
demanding such action, begin performing the Remedial Work, and thereafter
diligently prosecute it to completion, and shall in any event complete the work
by the time required by applicable Hazardous Materials Law.  If
Borrower fails to begin on a timely basis or diligently prosecute any required
Remedial Work, Lender may, at its option, cause the Remedial Work to
be
completed, in which case Borrower shall reimburse Lender on demand for the cost
of doing so.  Any reimbursement due from Borrower to Lender shall
become part of the Indebtedness as provided in Section 12.

     

    (i)           Borrower
shall comply with all Hazardous Materials Laws applicable to the Mortgaged
Property.  Without limiting the generality of the previous sentence,
Borrower shall (i) obtain and maintain all Environmental Permits required by
Hazardous Materials Laws and comply with all conditions of such Environmental
Permits; (ii) cooperate with any inquiry by any Governmental Authority; and
(iii) comply with any governmental or judicial order that arises from any
alleged Prohibited Activity or Condition.

     

    (j)           Borrower
shall indemnify, hold harmless and defend (i) Lender, including any custodian,
trustee and any other fiduciaries who hold or have held a full or partial
interest in the Loan for the benefit of third parties, (ii) any prior owner or
holder of the Note, (iii) the Loan Servicer, (iv) any prior Loan Servicer, (v)
the officers, directors, shareholders, partners, employees and trustees of any
of the foregoing, and (vi) the heirs, legal representatives, successors and
assigns of each of the foregoing (collectively, the “Indemnitees”) from and against
all proceedings, claims, damages, penalties and costs (whether initiated or
sought by Governmental Authorities or private parties), including Attorneys’
Fees and Costs and remediation costs, whether incurred in connection with any
judicial or administrative process or otherwise, arising directly or indirectly
from any of the following:

     

    
      	
               
      

            	
              (i)

            	
              any
      breach of any representation or warranty of Borrower in this Section
      18;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              any
      failure by Borrower to perform any of its obligations under this Section
      18;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              the
      existence or alleged existence of any Prohibited Activity or
      Condition;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              the
      presence or alleged presence of Hazardous Materials on or under the
      Mortgaged Property or in any of the Improvements;
  and

            


    

     

    
      	
               
      

            	
              (v)

            	
              the
      actual or alleged violation of any Hazardous Materials
  Law.

            


    

     

    
      
        
        

      

      
        
          
 PAGE 28

        
        

      

      
        
        

      

    

     

    (k)           Counsel
selected by Borrower to defend Indemnitees shall be subject to the approval of
those Indemnitees.  In any circumstances in which the indemnity under
this Section 18 applies, Lender may employ its own legal counsel and consultants
to prosecute, defend or negotiate any claim or legal or administrative
proceeding and Lender, with the prior written consent of Borrower (which shall
not be unreasonably withheld, delayed or conditioned) may settle or compromise
any action or legal or administrative proceeding.  However, unless an
Event of Default has occurred and is continuing, or the interests of Borrower
and Lender are in conflict, as determined by Lender in its discretion, Lender
shall permit Borrower to undertake the actions referenced in this Section 18 in
accordance with this Section 18(k) and Section 18(l) so long as Lender approves
such action, which approval shall not be unreasonably withheld or
delayed.  Borrower shall reimburse Lender upon demand for all costs
and expenses incurred by Lender, including all costs of settlements entered into
in good faith, consultants’ fees and Attorneys’ Fees and Costs.

     

    (l)           Borrower
shall not, without the prior written consent of those Indemnitees who are named
as parties to a claim or legal or administrative proceeding (a “Claim”), settle or
compromise
the Claim if the settlement (i) results in the entry of any judgment that does
not include as an unconditional term the delivery by the claimant or plaintiff
to Lender of a written release of those Indemnitees, satisfactory in form and
substance to Lender; or (ii) may materially and adversely affect Lender, as
determined by Lender in its discretion.

     

    (m)           Borrower’s
obligation to indemnify the Indemnitees shall not be limited or impaired by any
of the following, or by any failure of Borrower or any guarantor to receive
notice of or consideration for any of the following:

     

    
      	
               
      

            	
              (i)

            	
              any
      amendment or modification of any Loan
Document;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              any
      extensions of time for performance required by any Loan
      Document;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              any
      provision in any of the Loan Documents limiting Lender’s recourse to
      property securing the Indebtedness, or limiting the personal liability of
      Borrower or any other party for payment of all or any part of the
      Indebtedness;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              the
      accuracy or inaccuracy of any representations and warranties made by
      Borrower under this Instrument or any other Loan
  Document;

            


    

     

    
      	
               
      

            	
              (v)

            	
              the
      release of Borrower or any other Person, by Lender or by operation of law,
      from performance of any obligation under any Loan
  Document;

            


    

     

    
      	
               
      

            	
              (vi)

            	
              the
      release or substitution in whole or in part of any security for the
      Indebtedness; and

            


    

     

    
      	
               
      

            	
              (vii)

            	
              Lender’s
      failure to properly perfect any lien or security interest given as
      security for the Indebtedness.

            


    

     

    (n)           Borrower
shall, at its own cost and expense, do all of the following:

     

    
      	
               
      

            	
              (i)

            	
              pay
      or satisfy any judgment or decree that may be entered against any
      Indemnitee or Indemnitees in any legal or administrative proceeding
      incident to any matters against which Indemnitees are entitled to be
      indemnified under this Section 18;

            


    

     

    
      
        
        

      

      
        
          
 PAGE 29

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              reimburse
      Indemnitees for any expenses paid or incurred in connection with any
      matters against which Indemnitees are entitled to be indemnified under
      this Section 18; and

            


    

     

    
      	
               
      

            	
              (iii)

            	
              reimburse
      Indemnitees for any and all expenses, including Attorneys’ Fees and Costs,
      paid or incurred in connection with the enforcement by Indemnitees of
      their rights under this Section 18, or in monitoring and participating in
      any legal or administrative
proceeding.

            


    

     

    (o)           The
provisions of this Section 18 shall be in addition to any and all other
obligations and liabilities that Borrower may have under applicable law or under
other Loan Documents, and each Indemnitee shall be entitled to indemnification
under this Section 18 without regard to whether Lender or that Indemnitee has
exercised any rights against the Mortgaged Property or any other security,
pursued any rights against any guarantor, or pursued any other
rights available under the Loan Documents or applicable law. If Borrower
consists of more than one Person, the obligation of those Persons to indemnify
the Indemnitees under this Section 18 shall be joint and several. The obligation
of Borrower to indemnify the Indemnitees under this Section 18 shall survive any
repayment or discharge of the Indebtedness, any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the lien of this Instrument.  Notwithstanding the
foregoing, if Lender has never been a mortgagee-in-possession of, or held title
to, the Mortgaged Property, Borrower shall have no obligation to indemnify the
Indemnitees under this Section 18 after the date of the release of record of the
lien of this Instrument by payment in full at the Maturity Date or by voluntary
prepayment in full.

     

    19.           PROPERTY
AND LIABILITY INSURANCE.

     

    (a)           At
all times during the term hereof, Borrower shall maintain, at its sole cost and
expense, for the mutual benefit of Borrower and Lender, the following policies
of insurance:

     

    
      	
               
      

            	
              (i)

            	
              Insurance
      against any peril included within the classification “All Risks of
      Physical Loss” with extended coverage in amounts at all times sufficient
      to prevent Borrower from becoming a co-insurer within the terms of the
      applicable policies, but in any event such insurance shall be maintained
      in an amount equal to the full insurable value of the Mortgaged
      Property.  The policy referred to in this Section 19 shall
      contain a replacement cost endorsement and a waiver of
      depreciation.  As used in this Instrument, “full insurable
      value” means the actual replacement cost of the Improvements and
      Personalty (without taking into account any depreciation), determined
      annually by an insurer or by Borrower or, at the request of Lender, by an
      insurance broker (subject to Lender’s reasonable approval).  In
      all cases where any of the Improvements or the use of the Mortgaged
      Property shall at any time constitute legal non-conforming structures or
      uses under applicable legal requirements of any Governmental Authority,
      the policy referred to in this Section 19 must include “Ordinance and Law
      Coverage,” with “Time Element,” “Loss to the Undamaged Portion of the
      Building,” “Demolition Cost” and “Increased Cost of Construction”
      endorsements, in the amount of coverage required by
  Lender;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Commercial
      general liability insurance, including contractual injury, bodily injury,
      broad form death and property damage liability against
  any

            


    

     

    
      
        
        

      

      
        
          
 PAGE 30

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
               

            	
              and
      all claims, including all legal liability to the extent insurable imposed
      upon Borrower and all Attorneys’ Fees and Costs, arising out of or
      connected with the possession, use, leasing, operation, maintenance or
      condition of the Mortgaged Property with a combined limit of not less than
      $2,000,000 in the aggregate and $1,000,000 per occurrence, plus umbrella
      or excess liability coverage with minimum limits in the aggregate and per
      occurrence of $1,000,000 for Improvements that have 1 to 3 stories and an
      additional $2,000,000 in coverage for each additional story with maximum
      required coverage of $15,000,000, plus motor vehicle
      liability coverage for all owned and non-owned vehicles (including,
      without limitation, rented and leased vehicles) containing minimum limits
      per occurrence, including umbrella coverage, of
      $1,000,000.

            


    


    
      	
               
      

            	
              (iii)

            	
              Statutory
      workers’ compensation insurance;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              Business
      interruption including loss of rental value insurance for the Mortgaged
      Property in an amount equal to not less than twelve (12) months’ estimated
      gross Rents attributable to the Mortgaged Property and based on gross
      Rents for the immediately preceding year and otherwise sufficient to avoid
      any co-insurance penalty with a 90 day extended period of indemnity (but a
      minimum of eighteen (18) months’ estimated gross Rents attributable to the
      Mortgaged Property and based on gross Rents for the immediately preceding
      year and otherwise sufficient to avoid any co-insurance penalty with a 90
      day extended period of indemnity when (A) the Improvements have 5 or more
      stories or (B) at all times during which  the Indebtedness is
      equal to or greater than
$50,000,000);

            


    

     

    
      	
               
      

            	
              (v)

            	
              If
      any portion of the Improvements are located within a federally designated
      flood hazard zone, flood insurance in an amount equal to the full
      insurable value of the portion of such Improvements within such flood
      hazard zone.  Such coverage may need to be purchased through
      excess carriers if the required coverage exceeds the maximum insurance
      allowed under the federal flood insurance
  program;

            


    

     

    
      	
               
      

            	
              (vi)

            	
              Insurance
      against loss or damage from (A) leakage of sprinkler systems and (B)
      explosion of steam boilers, air conditioning equipment, pressure vessels
      or similar apparatus now or hereafter installed at the Mortgaged Property,
      in such amounts as Lender may from time to time reasonably require and
      which are customarily required by institutional lenders with respect to
      similar properties similarly
situated;

            


    

     

    
      	
               
      

            	
              (vii)

            	
              The
      insurance required under clauses (i) and (iv) above shall cover perils of
      terrorism and acts of terrorism and Borrower shall maintain commercial
      property insurance for loss resulting from perils and acts of terrorism on
      terms (including amounts) consistent with those required under clauses (i)
      and (iv) above at all times during the term of the Loan evidenced by the
      Note;

            


    

     

    
      	
               
      

            	
              (viii)

            	
              During
      any period of Restoration, builder’s “all risk” insurance in an amount
      equal to not less than the full insurable value of the Property against
      such risks (including fire and extended coverage and collapse of
      

            


    

     

    
      
        
        

      

      
        
          
 PAGE 31

        
        

      

      
        
        

      

    

    
       

      
        	
                 
      

              	
                 

              	
                 the
      Improvements to agreed limits) as Lender may request, in form and
      substance acceptable to Lender;
and

              


      

    

     

    
      	
               

            	
              (ix)

            	
              Such
      other insurance with respect to the Improvements and Personalty located on
      the Property against loss or damage as required by Lender (including,
      without limitation, liquor/dramshop, Mold, hurricane, windstorm and
      earthquake insurance) provided such insurance is of the kind for risks
      from time to time customarily insured against and in such minimum coverage
      amounts and maximum deductibles as are generally required by institutional
      lenders for properties comparable to the Mortgaged Property or which
      Lender may deem necessary in its reasonable discretion; provided, however,
      if Lender requires earthquake insurance, the amount of coverage must be
      equal to 150% of the probable maximum
      loss for the Mortgaged Property but Lender shall not require earthquake
      insurance if the probable maximum loss for the Mortgaged Property is less
      than twenty percent (20%).  In the event any updated reports or
      other documentation are reasonably required by Lender in order to
      determine whether such additional insurance is necessary or prudent,
      Borrower shall pay for all such documentation at its sole cost and
      expense.

            


    

     

    All
insurance required pursuant to subsections (i) and subsections (iv) through (ix)
shall be referred to as “Hazard Insurance”.

     

    (b)           All
premiums on insurance policies required under Section 19(a) shall be paid in the
manner provided in Section 7, unless Lender has designated in writing another
method of payment.  All such policies shall also be in a form approved
by Lender.  All policies of Hazard Insurance must include a
non-contributing, non-reporting mortgagee clause in favor of, and in a form
approved by, Lender.  All policies for general liability insurance
must contain a standard additional insured provision, in favor of, and in a form
approved by Lender.  Borrower shall deliver to Lender a legible copy
of each insurance policy (or duplicate original), and Borrower shall promptly
deliver to Lender a copy of all renewal and other notices received by Borrower
with respect to the policies and all receipts for paid premiums.  At
least 30 days prior to the expiration date of any insurance policy, Borrower
shall deliver to Lender evidence acceptable to Lender that the policy has been
renewed.  If Borrower has not delivered a legible copy of each renewal
policy (or a duplicate original) prior to the expiration date of any insurance
policy, Borrower shall deliver a legible copy of each renewal policy (or a
duplicate original) in a form satisfactory to Lender within 60 days after the
expiration date of the original policy.

     

    (c)           Borrower
will maintain the insurance coverage described in this Section 19 with companies
acceptable to Lender and with a claims paying ability of at least (i) “A-” or
its equivalent by Fitch, Inc., (ii) “A-” or its equivalent by Standard &
Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., (iii)
“A3” or its equivalent by Moody’s Investors Service, Inc. or (iv) “A VIII” or
its equivalent by A.M. Best Company.  All insurers providing insurance
required by this Instrument must be authorized to issue insurance in the
Property Jurisdiction.

     

    (d)           All
insurance policies and renewals of insurance policies required by this Section
19 shall be for such periods as Lender may from time to time
require.

     

    (e)           Borrower
shall comply with all insurance requirements and shall not permit any condition
to exist on the Mortgaged Property that would invalidate any part of any
insurance coverage that this Instrument requires Borrower to
maintain.

     

    
      
        
        

      

      
        
          
 PAGE 32

        
        

      

      
        
        

      

    

     

    (f)           In
the event of loss, Borrower shall give immediate written notice to the insurance
carrier and to Lender.  Borrower hereby authorizes and appoints Lender
as attorney in fact for Borrower to make proof of loss, to adjust and compromise
any claims under policies of Hazard Insurance, to appear in and prosecute any
action arising from such Hazard Insurance policies, to collect and receive the
proceeds of Hazard Insurance, to hold the proceeds of Hazard Insurance, and to
deduct from such proceeds Lender’s expenses incurred in the collection of such
proceeds.  This power of attorney is coupled with an interest and
therefore is irrevocable.  However, nothing contained in this Section
19 shall require Lender to incur any expense or take any
action.  Lender may, at Lender’s option, (i) require a “repair or
replacement” settlement, in which case the proceeds will be used to reimburse
Borrower for the cost of restoring and repairing the Mortgaged Property to the
equivalent of its original condition or to a condition approved by Lender
(the “Restoration”), or
(ii) require an “actual cash value” settlement in which case the proceeds may be
applied to the payment of the Indebtedness, whether or not then due. To the
extent Lender determines to require a repair or replacement settlement and apply
insurance proceeds to Restoration, Lender shall apply the proceeds in accordance
with Lender’s then-current policies relating to the restoration of casualty
damage on similar multifamily properties.

     

    (g)           Notwithstanding
any provision to the contrary in this Section 19, as long as no Event of
Default, or any event which, with the giving of Notice or the passage of time,
or both, would constitute an Event of Default, has occurred and is
continuing,

     

    
      	
               
      

            	
              (i)

            	
              in
      the event of a casualty resulting in damage to the Mortgaged Property
      which will cost $25,000 or less to repair, the Borrower shall have the
      sole right to make proof of loss, adjust and compromise the claim and
      collect and receive any proceeds directly without the approval or prior
      consent of the Lender so long as the insurance proceeds are used solely
      for the Restoration of the Mortgaged Property;
  and

            


    

     

    
      	
               
      

            	
              (ii)

            	
              in
      the event of a casualty resulting in damage to the Mortgaged Property
      which will cost more than $25,000 but less than $100,000 to repair, the
      Borrower is authorized to make proof of loss and adjust and compromise the
      claim without the prior consent of Lender, and Lender shall hold the
      applicable insurance proceeds to be used to reimburse Borrower for the
      cost of Restoration of the Mortgaged Property and shall not apply such
      proceeds to the payment of sums due under this
  Instrument.

            


    

     

    (h)           Lender
will have the right to exercise its option to apply insurance proceeds to the
payment of the Indebtedness only if Lender determines that at least one of the
following conditions is met:

     

    
      	
               
      

            	
              (i)

            	
              an
      Event of Default (or any event, which, with the giving of Notice or the
      passage of time, or both, would constitute an Event of Default) has
      occurred and is continuing;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Lender
      determines, in its discretion, that there will not be sufficient funds
      from insurance proceeds, anticipated contributions of Borrower of its own
      funds or other sources acceptable to Lender to complete the
      Restoration;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              Lender
      determines, in its discretion, that the rental income from the Mortgaged
      Property after completion of the Restoration will not be sufficient to
      meet all operating costs and other expenses,
  Imposition

            


    

     

    
      
        
        

      

      
        
          
 PAGE 33

        
        

      

      
        
        

      

    

    
       

      
        	
                 
      

              	
                 

              	
                 Deposits,
      deposits to reserves and Loan repayment obligations relating to the
      Mortgaged Property;

              


      

    

     

    
      	
               
      

            	
              (iv)

            	
              Lender
      determines, in its discretion, that the Restoration will not be completed
      by the earlier of (A) at least one year before the Maturity Date (or six
      months before the Maturity Date if Lender determines in its discretion
      that re-leasing of the Mortgaged Property will be completed within such
      six-month period) or (B) the expiration of the business interruption
      coverage;

            


    

     

    
      	
               
      

            	
              (v)

            	
              Lender
      determines that the Restoration will not be completed within one year
      after the date of the loss or
casualty;

            


    

     

    
      	
               
      

            	
              (vi)

            	
              the
      casualty involved an actual or constructive loss of more than 30% of the
      fair market value of the Mortgaged Property, and rendered untenantable
      more than 30% of the aggregate rentable square footage of the Mortgaged
      Property;

            


    

     

    
      	
               
      

            	
              (vii)

            	
              after
      Restoration the fair market value of the Mortgaged Property is expected to
      be less than the fair market value of the Mortgaged Property immediately
      prior to such casualty (assuming the affected portion of the Mortgaged
      Property is relet within a reasonable period after the date of such
      casualty); or

            


    

     

    
      	
               
      

            	
              (viii)

            	
              Leases
      covering at least 65% of the aggregate rentable square footage of the
      Mortgaged Property shall not remain in full force and effect during and
      after the completion of
Restoration.

            


    

     

    (i)           If
the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to
the Mortgaged Property, Lender shall automatically succeed to all rights of
Borrower in and to any insurance policies and unearned insurance premiums and in
and to the proceeds resulting from any damage to the Mortgaged Property prior to
such sale or acquisition.

     

    (j)           Unless
Lender otherwise agrees in writing, any application of any insurance proceeds to
the Indebtedness shall not extend or postpone the due date of any monthly
installments referred to in the Note, Section 7 of this Instrument or any
Collateral Agreement, or change the amount of such installments.

     

    (k)           Borrower
agrees to execute such further evidence of assignment of any insurance proceeds
as Lender may require.

     

    20.           CONDEMNATION.

     

    (a)           Borrower
shall promptly notify Lender in writing of any action or proceeding or notice
relating to any proposed or actual condemnation or other taking, or conveyance
in lieu thereof, of all or any part of the Mortgaged Property, whether direct or
indirect (a “Condemnation”).  Borrower
shall appear in and prosecute or defend any action or proceeding relating to any
Condemnation unless otherwise directed by Lender in writing.  Borrower
authorizes and appoints Lender as attorney in fact for Borrower to commence,
appear in and prosecute, in Lender’s or Borrower’s name, any action or
proceeding relating to any Condemnation and to settle or compromise any claim in
connection with any Condemnation, after consultation with Borrower and
consistent with commercially reasonable standards of a

     

    
      
        
        

      

      
        
          
 PAGE 34

        
        

      

      
        
        

      

    

     

    prudent
lender.  This power of attorney is coupled with an interest and
therefore is irrevocable.  However, nothing contained in this Section
20 shall require Lender to incur any expense or take any
action.  Borrower hereby transfers and assigns to Lender all right,
title and interest of Borrower in and to any award or payment with respect to
(i) any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any
damage to the Mortgaged Property caused by governmental action that does not
result in a Condemnation.

     

    (b)           Lender
may hold such awards or proceeds and apply such awards or proceeds, after the
deduction of Lender’s expenses incurred in the collection of such amounts
(including Attorneys’
Fees and Costs) at Lender’s option, to the restoration or repair of the
Mortgaged Property or to the payment of the Indebtedness, with the balance, if
any, to Borrower.  Unless Lender otherwise agrees in writing, any
application of any awards or proceeds to the Indebtedness shall not extend or
postpone the due date of any monthly installments referred to in the Note,
Section 7 of this Instrument or any Collateral Agreement, or change the amount
of such installments.  Borrower agrees to execute such further
evidence of assignment of any awards or proceeds as Lender may
require.

     

    (c)           Notwithstanding
any provision to the contrary in this Section 20, in the event of a partial
Condemnation of the Mortgaged Property, as long as no Event of Default, or any
event which, with the giving of Notice or the passage of time, or both, would
constitute an Event of Default, has occurred and is continuing,

     

    
      	
               
      

            	
              (i)

            	
              in
      the event of a partial Condemnation resulting in proceeds or awards in the
      amount of $25,000 or less, the Borrower shall have the sole right to make
      proof of loss, adjust and compromise the claim and collect and receive any
      proceeds directly without the approval or prior consent of the Lender so
      long as the proceeds or awards are used solely for the Restoration of the
      Mortgaged Property; and

            


    

     

    
      	
               
      

            	
              (ii)

            	
              in
      the event of a partial Condemnation resulting in proceeds or awards in the
      amount of more than $25,000 but less than $100,000, the Borrower is
      authorized to make proof of loss and adjust and compromise the claim
      without the prior consent of Lender, and Lender shall hold the applicable
      proceeds or awards to be used to reimburse Borrower for the cost of
      Restoration of the Mortgaged Property and shall not apply such proceeds
      and awards to the payment of sums due under this
    Instrument.

            


    

     

    (d)           In
the event of a partial Condemnation of the Mortgaged Property resulting in
proceeds or awards in the amount of $100,000 or more, Lender will have the right
to exercise its option to apply Condemnation proceeds to the payment of the
Indebtedness only if Lender determines that at least one of the following
conditions is met:

     

    
      	
               
      

            	
              (i)

            	
              an
      Event of Default (or any event, which, with the giving of Notice or the
      passage of time, or both, would constitute an Event of Default) has
      occurred and is continuing;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Lender
      determines, in its discretion, that there will not be sufficient funds
      from Condemnation proceeds, anticipated contributions of Borrower of its
      own funds or other sources acceptable to Lender to complete the
      Restoration;

            


    

     

    
      
        
        

      

      
        
          
 PAGE 35

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iii)

            	
              Lender
      determines, in its discretion, that the rental income from the Mortgaged
      Property after completion of the Restoration will not be sufficient to
      meet all operating costs and other expenses, Imposition Deposits, deposits
      to reserves and Loan repayment obligations relating to the Mortgaged
      Property;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              Lender
      determines, in its discretion, that the Restoration will not be completed
      at least one year before the Maturity Date (or six months before 

                the
      Maturity Date if Lender determines in its discretion that re-leasing of
      the Mortgaged Property will be completed within such six-month
      period);

              

            


    

     

    
      	
               
      

            	
              (v)

            	
              Lender
      determines that the Restoration will not be completed within one year
      after the date of the Condemnation;

            


    

     

    
      	
               
      

            	
              (vi)

            	
              the
      Condemnation involved an actual or constructive loss of more than 15% of
      the fair market value of the Mortgaged Property, and rendered untenantable
      more than 25% of the aggregate rentable square footage of the Mortgaged
      Property;

            


    

     

    
      	
               
      

            	
              (vii)

            	
              after
      Restoration the fair market value of the Mortgaged Property is expected to
      be less than the fair market value of the Mortgaged Property immediately
      prior to the Condemnation (assuming the affected portion of the Mortgaged
      Property is relet within a reasonable period after the date of the
      Condemnation); or

            


    

     

    
      	
               
      

            	
              (viii)

            	
              Leases
      covering at least 65% of the aggregate rentable square footage of the
      Mortgaged Property shall not remain in full force and effect during and
      after the completion of
Restoration.

            


    

     

    (e)           If
the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to
the Mortgaged Property, Lender shall automatically succeed to all rights of
Borrower in and to any Condemnation proceeds and awards prior to such sale or
acquisition.

     

    (f)           Borrower
agrees to execute such further evidence of assignment of any Condemnation
proceeds as Lender may require.

     

    21.           TRANSFERS OF THE MORTGAGED PROPERTY
OR INTERESTS IN BORROWER.  [RIGHT TO UNLIMITED TRANSFERS -- WITH
LENDER APPROVAL].  Notwithstanding anything to the contrary in
this Section 21, no Transfer will be permitted under this Section 21 unless the
provisions of Section 33 are satisfied.

     

    (a)           “Transfer” means

     

    
      	
               
      

            	
              (i)

            	
              a
      sale, assignment, transfer or other disposition or divestment of any
      interest therein (whether voluntary, involuntary or by operation of
      law);

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      granting, creating or attachment of a lien, encumbrance or security
      interest (whether voluntary, involuntary or by operation of
      law);

            


    

     

    
      	
               
      

            	
              (iii)

            	
              the
      issuance or other creation of an ownership interest in a legal entity,
      including a partnership interest, interest in a limited liability company
      or corporate stock;

            


    

     

    
      
        
        

      

      
        
          
 PAGE 36

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iv)

            	
              the
      withdrawal, retirement, removal or involuntary resignation of a partner in
      a partnership or a member or Manager in a limited liability company;
      or

            


    

     

    
      	
               
      

            	
              (v)

            	
              the
      merger, dissolution, liquidation, or consolidation of a legal entity or
      the reconstitution of one type of legal entity into another type of legal
      entity.

            


    

     

    
      For
purposes of defining the term “Transfer,” the term “partnership” shall mean a
general partnership, a limited partnership, and a joint venture, and the term
“partner” shall mean a general partner, a limited partner and a joint
venturer.

    

     

    (b)           “Transfer”
does not include

     

    
      	
               
      

            	
              (i)

            	
              a
      conveyance of the Mortgaged Property at a judicial or non-judicial
      foreclosure sale under this
Instrument,

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      Mortgaged Property becoming part of a bankruptcy estate by operation of
      law under the United States Bankruptcy Code,
or

            


    

     

    
      	
               
      

            	
              (iii)

            	
              a
      lien against the Mortgaged Property for local taxes and/or assessments not
      then due and payable.

            


    

     

    (c)           The
occurrence of any of the following Transfers shall not constitute an Event of
Default under this Instrument, notwithstanding any provision of Section 21(e) to
the contrary:

     

    
      	
               
      

            	
              (i)

            	
              a
      Transfer to which Lender has
consented;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              a
      Transfer that occurs in accordance with Section
  21(d);

            


    

     

    
      	
               
      

            	
              (iii)

            	
              the
      grant of a leasehold interest in an individual dwelling unit for a term of
      two years or less not containing an option to
  purchase;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              a
      Transfer of obsolete or worn out Personalty or Fixtures that are
      contemporaneously replaced by items of equal or better function and
      quality, which are free of liens, encumbrances and security interests
      other than those created by the Loan Documents or consented to by
      Lender;

            


    

     

    
      	
               
      

            	
              (v)

            	
              the
      creation of a mechanic’s, materialman’s, or judgment lien against the
      Mortgaged Property, which is released of record or otherwise remedied to
      Lender’s satisfaction within 60 days of the date of
    creation;

            


    

     

    
      	
               
      

            	
              (vi)

            	
              if
      Borrower is a housing cooperative corporation or association, the Transfer
      of more than 49 percent of the shares in the housing cooperative or the
      assignment of more than 49 percent of the occupancy agreements or leases
      relating thereto by tenant shareholders of the housing cooperative or
      association to other tenant
shareholders;

            


    

     

    
      	
               
      

            	
              (vii)

            	
              any
      Transfer of an interest in Borrower or any interest in a Controlling
      Entity (which, if such Controlling Entity were Borrower, would result in
      an Event of Default) listed in (A) through (F) below (a “Preapproved Transfer”),
      under the terms and conditions listed as items (1) through (10)
      below:

            


    

     

    
      
        
        

      

      
        
          
 PAGE 37

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (A)

            	
              a
      sale or transfer to one or more of the transferor’s immediate family
      members; or

            


    

     

    
      	
               
      

            	
              (B)

            	
              a
      sale or transfer to any trust having as its sole beneficiaries the
      transferor and/or one or more of the transferor’s immediate family
      members; or

            


    

     

    
      	
               
      

            	
              (C)

            	
              a
      sale or transfer from a trust to any one or more of its beneficiaries who
      are immediate family members of the transferor ;
  or

            


    

     

    
      	
               
      

            	
              (D)

            	
              the
      substitution or replacement of the trustee of any trust with a trustee who
      is an immediate family member of the transferor;
  or

            


    

     

    
      	
               
      

            	
              (E)

            	
              a
      sale or transfer to an entity owned and Controlled by the transferor or
      the transferor’s immediate family members;
or

            


    

     

    
      	
               
      

            	
              (F)

            	
              a
      sale or transfer to a natural person or entity that has an existing
      interest in the Borrower or in a Controlling
  Entity.

            


    

     

    
      	
               
      

            	
              (1)

            	
              Borrower
      shall provide Lender with prior written Notice of the proposed Preapproved
      Transfer, which Notice must be accompanied by a non-refundable review fee
      in the amount of $3,000.00.

            


    

     

    
      	
               
      

            	
              (2)

            	
              For
      the purposes of these Preapproved Transfers, a transferor’s immediate
      family members will be deemed to include a spouse, parent, child or
      grandchild of such transferor.

            


    

     

    
      	
               
      

            	
              (3)

            	
              Either
      directly or indirectly, [See Exhibit B] shall retain at all times a
      Controlling Interest in the Borrower and manage the day-to-day operations
      of the Borrower.

            


    

     

    
      	
               
      

            	
              (4)

            	
              At
      the time of the proposed Preapproved Transfer, no Event of Default shall
      have occurred and be continuing and no event or condition shall have
      occurred and be continuing that, with the giving of Notice or the passage
      of time, or both, would become an Event of
  Default.

            


    

     

    
      	
               
      

            	
              (5)

            	
              Lender
      shall be entitled to collect all costs, including the cost of all title
      searches, title insurance and recording costs, and all Attorneys’ Fees and
      Costs.

            


    

     

    
      	
               
      

            	
              (6)

            	
              Lender
      shall not be entitled to collect a transfer fee as a result of these
      Preapproved Transfers.

            


    

     

    
      	
               
      

            	
              (7)

            	
              In
      the event of a Transfer prohibited by or requiring Lender’s approval under
      this Section 21, this Section (c)(vii) may be modified or rendered void by
      Lender at Lender’s option by Notice to Borrower and the transferee(s), as
      a condition of Lender’s consent.

            


    

     

    
      
        
        

      

      
        
          
 PAGE 38

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (8)

            	
              if
      any certificates evidencing the Securitization remain outstanding, a
      Rating Confirmation.

            


    


    
      	
               
      

            	
              (9)

            	
              If
      a nonconsolidation opinion was delivered at origination of the Loan and
      if, after giving effect to all Preapproved Transfers and all prior
      Transfers, fifty percent (50%) or more in the aggregate of direct or
      indirect interests in Borrower are owned by any Person and its Affiliates
      that owned less than a fifty percent (50%) direct or indirect interest in
      Borrower as of the origination of the Loan, an opinion of counsel for
      Borrower, in form and substance satisfactory to Lender and to the Rating
      Agencies, with regard to
nonconsolidation.

            


    

     

    
      	
               
      

            	
              (10)

            	
              Confirmation
      acceptable to Lender that Section 33 continues to be satisfied;
      and

            


    

     

    
      	
               
      

            	
              (viii)

            	
              a
      Supplemental Mortgage that complies with Section 43 or Defeasance that
      complies with Section 44.

            


    

     

    (d)           The
occurrence of any of the following Transfers shall not constitute an Event of
Default under this Instrument, provided such Transfer does not constitute an
Event of Default under any other Section of this Instrument:

     

    
      	
               
      

            	
              (i)

            	
              a
      Transfer that occurs by devise, descent, or by operation of law upon the
      death of a natural person to one or more members of the immediate family
      of such natural person or to a trust or family conservatorship established
      for the benefit of such immediate family member or members, provided
      that:

            


    

     

    
      	
               
      

            	
              (A)

            	
              The
      Property Manager (or a replacement property manager approved by Lender),
      if applicable, continues to be responsible for the management of the
      Mortgaged Property, and such Transfer shall not result in a change in the
      day-to-day operations of the Mortgaged
Property;

            


    

     

    
      	
               
      

            	
              (B)

            	
              those
      persons responsible for the management and control of Borrower remain
      unchanged as a result of such Transfer, or any replacement management is
      approved by Lender;

            


    

     

    
      	
               
      

            	
              (C)

            	
              Lender
      receives confirmation acceptable to Lender that Section 33 continues to be
      satisfied;

            


    

     

    
      	
               
      

            	
              (D)

            	
              each
      guarantor executes such documents and agreements as Lender shall
      reasonably require to evidence and effectuate the ratification of each
      guaranty and indemnity agreement, or in the event of the death of any
      guarantor or indemnitor, the Borrower causes one or more natural persons
      or entities acceptable to Lender to execute and deliver to Lender a
      guaranty in a form acceptable to Lender, without any cost or expense to
      Lender;

            


    

     

    
      
        
        

      

      
        
          
 PAGE 39

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (E)

            	
              Borrower
      shall give Lender Notice of such Transfer together with copies of all
      documents effecting such Transfer not less than thirty (30) calendar days
      after the date of such Transfer, and contemporaneously
      therewith, shall (1) reaffirm the warranties and representations under
      Section 10 and Section 48 of this Instrument and (2) satisfy Lender, in
      its discretion, that such Transferee’s organization, credit and experience
      in the management of similar properties are deemed to be appropriate to
      the overall structure and documentation of the existing
      financing;

            


    

     

    
      	
               
      

            	
              (F)

            	
              such
      legal opinions from Transferee’s counsel as Lender deems necessary,
      including an opinion that the Transferee and any SPE Equity Owner is in
      compliance with Section 33 of this Instrument, a nonconsolidation opinion
      (if a nonconsolidation opinion was delivered at origination of the Loan
      and if required by Lender), an opinion that the ratification of the Loan
      Documents and guaranty, if applicable, has been duly authorized, executed,
      and delivered and that the ratification documents and guaranty, if
      applicable, are enforceable as the obligation of the
      Transferee;

            


    

     

    
      	
               
      

            	
              (G)

            	
              if
      any certificates evidencing the Securitization remain outstanding, a
      Rating Confirmation; and

            


    

     

    
      	
               
      

            	
              (H)

            	
              Borrower
      shall pay or reimburse Lender for all costs and expenses incurred by
      Lender in connection with such Transfer (including all Attorneys’ Fees and
      Costs); and

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      grant of an easement, if before the grant Lender determines that the
      easement will not materially affect the operation or value of the
      Mortgaged Property or Lender’s interest in the Mortgaged Property, and
      Borrower pays to Lender, upon demand, all costs and expenses, including
      Attorneys’ Fees and Costs, incurred by Lender in connection with reviewing
      Borrower’s request; and, if the Note is held by a REMIC trust and if
      required by Lender, an opinion of counsel for Borrower, in form and
      substance satisfactory to Lender, to the effect that (A) the grant of such
      easement has been effected in accordance with the requirements of Treasury
      Regulation Section 1.860G-2(a)(8) (as such regulation may be modified,
      amended or replaced from time to time), (B) the qualification and status
      of the REMIC trust as a REMIC will not be adversely affected or impaired
      as a result of such grant, and (C) the REMIC trust will not incur a tax
      under Section 860G(d) of the Tax Code as a result of such
      grant.

            


    

     

    (e)           The
occurrence of any of the following Transfers shall constitute an Event of
Default under this Instrument:

     

    
      	
               
      

            	
              (i)

            	
              a
      Transfer of all or any part of the Mortgaged Property or any interest in
      the Mortgaged Property;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              if
      Borrower is a limited partnership, a Transfer of (A) any general
      partnership interest, or (B) limited partnership interests in Borrower
      that

            


    

     

    
      
        
        

      

      
        
          
 PAGE 40

        
        

      

      
        
        

      

    

     

    
       

      
        	
                 
      

              	
                 

              	
                would
      cause the Initial Owners of Borrower to own less than 50% of all limited
      partnership interests in
Borrower;

              


      

    

     

    
      	
               
      

            	
              (iii)

            	
              if
      Borrower is a limited liability company, (A) a Transfer of any membership
      interest in Borrower which would cause the Initial Owners to own less than
      50% of all the membership interests in Borrower or (B) a Transfer that
      results in a change of Manager;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              if
      Borrower is a corporation (A) the Transfer of any voting stock in Borrower
      which would cause the Initial Owners to own less than 50% of any class of
      voting stock in Borrower or (B) if the outstanding voting stock in
      Borrower is held by 100 or more shareholders, one or more Transfers by a
      single transferor within a 12-month period affecting an aggregate of 5
      percent or more of that stock;

            


    

     

    
      	
               
      

            	
              (v)

            	
              a
      Transfer of any interest in a Controlling Entity which, if such
      Controlling Entity were Borrower, would result in an Event of Default
      under any of Sections 21(e)(i) through (iv)
  above.

            


    

     

    Lender
shall not be required to demonstrate any actual impairment of its security or
any increased risk of default in order to exercise any of its remedies with
respect to an Event of Default under this Section 21.

     

    (f)           Lender
shall consent, without any adjustment to the rate at which the Indebtedness
secured by this Instrument bears interest or to any other economic terms of the
Indebtedness set forth in the Note, to a Transfer that would otherwise violate
this Section 21 if, prior to the Transfer, Borrower has satisfied each of the
following requirements:

     

    
      	
               
      

            	
              (i)

            	
              the
      submission to Lender of all information required by Lender to make the
      determination required by this Section
21(f);

            


    

     

    
      	
               
      

            	
              (ii)

            	
              the
      absence of any Event of Default;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              the
      transferee (the “Transferee”) meets
      Lender’s eligibility, credit, management and other standards satisfactory
      to Lender in its sole discretion;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              the
      Transferee’s organization, credit and experience in the management of
      similar properties are deemed by the Lender, in its discretion, to be
      appropriate to the overall structure and documentation of the existing
      financing;

            


    

     

    
      	
               
      

            	
              (v)

            	
              the
      Mortgaged Property will be managed by a property manager meeting the
      requirements of Section 17(e);

            


    

     

    
      	
               
      

            	
              (vi)

            	
              the
      Mortgaged Property, at the time of the proposed Transfer, meets all
      standards as to its physical condition, occupancy, net operating income
      and the collection of reserves satisfactory to Lender in its sole
      discretion;

            


    

     

    
      	
               
      

            	
              (vii)

            	
              in
      the case of a Transfer of all or any part of the Mortgaged Property, (A)
      the execution by the Transferee of Lender’s then-standard assumption
      agreement that, among other things, requires the Transferee to perform all
      

            


    

     

    
      
        
        

      

      
        
          
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                obligations
      of Borrower set forth in the Note, this Instrument and any other Loan
      Documents, and may require that the Transferee comply with any
      provisions of this Instrument or any other Loan Document which previously
      may have been waived or modified by Lender, (B) if Lender requires, the
      Transferee causes one or more natural persons or entities acceptable to
      Lender to execute and deliver to Lender a guaranty in a form acceptable to
      Lender, and (C) the Transferee executes such additional Collateral
      Agreements as Lender may
require;

              


      

    

     

    
      	
               
      

            	
              (viii)

            	
              in
      the case of a Transfer of any interest in a Controlling Entity, if a
      guaranty has been executed and delivered in connection with the Note, this
      Instrument or any of the other Loan Documents, the Borrower causes one or
      more natural persons or entities acceptable to Lender to execute and
      deliver to Lender a guaranty in a form acceptable to
    Lender;

            


    

     

    
      	
               
      

            	
              (ix)

            	
              If
      a Supplemental Mortgage is outstanding, the Borrower obtains the consent
      of the lender for the Supplemental
Mortgage;

            


    

     

    
      	
               
      

            	
              (x)

            	
              Lender’s
      receipt of all of the following:

            


    

     

    
      	
               
      

            	
              (A)

            	
              a
      review fee in the amount of
$3,000.00;

            


    

     

    
      	
               
      

            	
              (B)

            	
              a
      transfer fee in an amount equal to one percent of the unpaid principal
      balance of the Indebtedness immediately before the applicable Transfer;
      and

            


    

     

    
      	
               
      

            	
              (C)

            	
              the
      amount of Lender’s out of pocket costs (including reasonable Attorneys’
      Fees and Costs) incurred in reviewing the Transfer request and any fees
      charged by the Rating Agencies; and

            


    

     

    
      	
               
      

            	
              (xi)

            	
              evidence
      satisfactory to Lender that the Transferee and any SPE Equity Owner of
      such Transferee meet the requirements of Section
  33;

            


    

     

    
      	
               
      

            	
              (xii)

            	
              such
      legal opinions from Transferee’s counsel as Lender deems necessary,
      including an opinion that the Transferee and any SPE Equity Owner is in
      compliance with Section 33 of this Instrument, a nonconsolidation opinion
      (if a nonconsolidation opinion was delivered at origination of the Loan
      and if required by Lender), an opinion that the assignment and assumption
      of the Loan Documents has been duly authorized, executed, and delivered
      and that the assignment documents and the Loan Documents are enforceable
      as the obligation of the Transferee;
and

            


    

     

    
      	
               
      

            	
              (xiii)

            	
              if
      any certificates evidencing the Securitization remain outstanding, a
      Rating Confirmation.

            


    

     

    22.           EVENTS OF
DEFAULT.  The occurrence of any one or more of the following
shall constitute an Event of Default under this Instrument:

     

    (a)           any
failure by Borrower to pay or deposit when due any amount required by the Note,
this Instrument or any other Loan Document;

     

    
      
        
        

      

      
        
          
 PAGE 42

        
        

      

      
        
        

      

    

     

    (b)           any
failure by Borrower to maintain the insurance coverage required by Section
19;


    (c)           any
failure by Borrower or any SPE Equity Owner to comply with the provisions of
Section 33 or if any of the assumptions contained in any nonconsolidation
opinions delivered to Lender at any time is or shall become untrue in any
material respect;

     

    (d)           fraud
or material misrepresentation or material omission by Borrower, any of its
officers, directors, trustees, general partners or managers, any SPE Equity
Owner or any guarantor in connection with (i) the application for or creation of
the Indebtedness, (ii) any financial statement, Rent Schedule, or other report
or information provided to Lender during the term of the Indebtedness, or (iii)
any request for Lender’s consent to any proposed action, including a request for
disbursement of funds under any Collateral Agreement;

     

    (e)           any
failure by Borrower to comply with the provisions of Section 20;

     

    (f)           any
Event of Default under Section 21;

     

    (g)           the
commencement of a forfeiture action or proceeding, whether civil or criminal,
which could result in a forfeiture of the Mortgaged Property or otherwise
materially impair the lien created by this Instrument or Lender’s interest in
the Mortgaged Property;

     

    (h)           any
failure by Borrower to perform any of its obligations under this Instrument
(other than those specified in Sections 22(a) through (g)), as and when
required, which continues for a period of 30 days after Notice of such failure
by Lender to Borrower.  However, if Borrower’s failure to perform its
obligations as described in this Section 22(h) is of the nature that it cannot
be cured within the 30 day grace period but reasonably could be cured within 90
days, then Borrower shall have additional time as determined by Lender in its
discretion, not to exceed an additional 60 days, in which to cure such default,
provided that Borrower has diligently commenced to cure such default during the
30-day grace period and diligently pursues the cure of such
default.  However, no such Notice or grace periods shall apply in the
case of any such failure which could, in Lender’s judgment, absent immediate
exercise by Lender of a right or remedy under this Instrument, result in harm to
Lender, impairment of the Note or this Instrument or any other security given
under any other Loan Document;

     

    (i)           any
failure by Borrower to perform any of its obligations as and when required under
any Loan Document other than this Instrument which continues beyond the
applicable cure period, if any, specified in that Loan Document;

     

    (j)           any
exercise by the holder of any other debt instrument secured by a mortgage, deed
of trust or deed to secure debt on the Mortgaged Property of a right to declare
all amounts due under that debt instrument immediately due and
payable;

     

    (k)           if
(i) Borrower or any SPE Equity Owner shall commence any case, Proceeding or
other action under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or
relief of debtors (A) seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debt, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets; or (ii) there
shall be commenced against Borrower or any SPE Equity Owner any case,
Proceeding, or other action of a nature referred to in clause (i) above by any
party other than

     

    
      
        
        

      

      
        
          
 PAGE 43

        
        

      

      
        
        

      

    

     

    Lender
which (A) results in the entry of an order for relief or any such adjudication
or appointment, or (B) remains undismissed, undischarged or unbonded for a
period of ninety (90) days; or
(iii) there shall be commenced against Borrower or any SPE Equity Owner any
case, Proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of any order by a court of competent
jurisdiction for any such relief which shall not have been vacated, discharged,
or stayed or bonded pending appeal within ninety (90) days from the entry
thereof; or (iv) Borrower or any SPE Equity Owner shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii) or (iii) above; and

     

    (l)           any
representations and warranties by Borrower or any SPE Equity Owner in this
Instrument that are false or misleading in any material respect.

     

    23.           REMEDIES CUMULATIVE; REMEDIES OF
BORROWER.  Each right and remedy provided in this Instrument is
distinct from all other rights or remedies under this Instrument or any other
Loan Document or afforded by applicable law, and each shall be cumulative and
may be exercised concurrently, independently, or successively, in any
order.  In the event that a claim or adjudication is made that Lender
has acted unreasonably or unreasonably delayed acting in any case where, by law
or under this Instrument or the other Loan Documents, Lender has an obligation
to act reasonably or promptly, Lender shall not be liable for any monetary
damages, and Borrower’s sole remedy shall be limited to commencing an action
seeking injunctive relief or declaratory judgment.  Any action or
proceeding to determine whether Lender has acted reasonably shall be determined
by an action seeking declaratory judgment.

     

    24.           FORBEARANCE.

     

    (a)           Lender
may (but shall not be obligated to) agree with Borrower, from time to time, and
without giving notice to, or obtaining the consent of, or having any effect upon
the obligations of, any guarantor or other third party obligor, to take any of
the following actions:  extend the time for payment of all or any part
of the Indebtedness; reduce the payments due under this Instrument, the Note, or
any other Loan Document; release anyone liable for the payment of any amounts
under this Instrument, the Note, or any other Loan Document; accept a renewal of
the Note; modify the terms and time of payment of the Indebtedness; join in any
extension or subordination agreement; release any Mortgaged Property; take or
release other or additional security; modify the rate of interest or period of
amortization of the Note or change the amount of the monthly installments
payable under the Note; and otherwise modify this Instrument, the Note, or any
other Loan Document.

     

    (b)           Any
forbearance by Lender in exercising any right or remedy under the Note, this
Instrument, or any other Loan Document or otherwise afforded by applicable law,
shall not be a waiver of or preclude the exercise of any other right or remedy,
or the subsequent exercise of any right or remedy.  The acceptance by
Lender of payment of all or any part of the Indebtedness after the due date of
such payment, or in an amount which is less than the required payment, shall not
be a waiver of Lender’s right to require prompt payment when due of all other
payments on account of the Indebtedness or to exercise any remedies for any
failure to make prompt payment. Enforcement by Lender of any security for the
Indebtedness shall not constitute an election by Lender of remedies so as to
preclude the exercise of any other right available to
Lender.  Lender’s receipt of any awards or proceeds under Sections 19
and 20 shall not operate to cure or waive any Event of Default.

     

    
      
        
        

      

      
        
          
 PAGE 44

        
        

      

      
        
        

      

    

     

    25.           LOAN CHARGES.  If
any applicable law limiting the amount of interest or other charges permitted to
be collected from Borrower is interpreted so that any charge provided for in any
Loan Document, whether considered separately or together with other charges
levied in connection with any other Loan Document, violates that law, and
Borrower is entitled to the benefit of that law, that charge is hereby reduced
to the extent necessary to eliminate that violation.  The amounts, if
any, previously paid to Lender in excess of the permitted amounts shall be
applied by Lender to reduce the principal of the Indebtedness.  For
the purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all Indebtedness which constitutes interest, as well as all other
charges levied in connection with the Indebtedness which constitute interest,
shall be deemed to be allocated and spread over the stated term of the
Note.  Unless otherwise required by applicable law, such allocation
and spreading shall be effected in such a manner that the rate of interest so
computed is uniform throughout the stated term of the Note.

     

    26.           WAIVER OF STATUTE OF LIMITATIONS,
OFFSETS, AND COUNTERCLAIMS.  Borrower hereby waives the right
to assert any statute of limitations as a bar to the enforcement of the lien of
this Instrument or to any action brought to enforce any Loan
Document.  Borrower hereby waives the right to assert a counterclaim,
other than a compulsory counterclaim, in any action or proceeding brought
against it by Lender or otherwise to offset any obligations to make the payments
required by the Loan Documents.  No failure by Lender to perform any
of its obligations hereunder shall be a valid defense to, or result in any
offset against, any payments that Borrower is obligated to make under any of the
Loan Documents.

     

    27.           WAIVER OF
MARSHALLING.  Notwithstanding the existence of any other
security interests in the Mortgaged Property held by Lender or by any other
party, Lender shall have the right to determine the order in which any or all of
the Mortgaged Property shall be subjected to the remedies provided in this
Instrument, the Note, any other Loan Document or applicable
law.  Lender shall have the right to determine the order in which any
or all portions of the Indebtedness are satisfied from the proceeds realized
upon the exercise of such remedies.  Borrower and any party who now or
in the future acquires a security interest in the Mortgaged Property and who has
actual or constructive notice of this Instrument waives any and all right to
require the marshalling of assets or to require that any of the Mortgaged
Property be sold in the inverse order of alienation or that any of the Mortgaged
Property be sold in parcels or as an entirety in connection with the exercise of
any of the remedies permitted by applicable law or provided in this
Instrument.

     

    28.           FURTHER ASSURANCES; LENDER’S
EXPENSES.  Borrower shall execute, acknowledge, and deliver, at
its sole cost and expense, all further acts, deeds, conveyances, assignments,
estoppel certificates, financing statements or amendments, transfers and
assurances as Lender may require from time to time in order to better assure,
grant, and convey to Lender the rights intended to be granted, now or in the
future, to Lender under this Instrument and the Loan
Documents.  Borrower acknowledges and agrees that, in connection with
each request by Borrower under this Instrument or any Loan Document, Borrower
shall pay all reasonable Attorneys’ Fees and Costs and expenses incurred by
Lender, including any fees charged by the Rating Agencies, regardless of whether
the matter is approved, denied or withdrawn. Any amounts payable by Borrower
hereunder shall be deemed a part of the Indebtedness, shall be secured by this
Instrument and shall bear interest at the Default Rate if not fully paid within
ten (10) days of written demand for payment.

     

    29.           ESTOPPEL
CERTIFICATE.  Within 10 days after a request from Lender,
Borrower shall deliver to Lender a written statement, signed and acknowledged by
Borrower, certifying
to Lender or any Person designated by Lender, as of the date of such statement,
(i) that

     

    
      
        
        

      

      
        
          
 PAGE 45

        
        

      

      
        
        

      

    

     

    the Loan
Documents are unmodified and in full force and effect  (or, if there
have been modifications, that the Loan Documents are in full force and effect as
modified and setting forth such modifications); (ii) the unpaid principal
balance of the Note; (iii) the date to which interest under the Note has been
paid; (iv) that Borrower is not in default in paying the Indebtedness or in
performing or observing any of the covenants or agreements contained in this
Instrument or any of the other Loan Documents (or, if the Borrower is in
default, describing such default in reasonable detail); (v) whether or not there
are then existing any setoffs or defenses known to Borrower against the
enforcement of any right or remedy of Lender under the Loan Documents; and (vi)
any additional facts requested by Lender.

     

    30.           GOVERNING
LAW; CONSENT TO JURISDICTION AND VENUE.

     

    (a)           This
Instrument, and any Loan Document which does not itself expressly identify the
law that is to apply to it, shall be governed by the laws of the jurisdiction in
which the Land is located (the “Property
Jurisdiction”).

     

    (b)           Borrower
agrees that any controversy arising under or in relation to the Note, this
Instrument, or any other Loan Document may be litigated in the Property
Jurisdiction.  The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have jurisdiction over all
controversies that shall arise under or in relation to the Note, any security
for the Indebtedness, or any other Loan Document.  Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.  However, nothing
in this Section 30 is intended to limit Lender’s right to bring any suit, action
or proceeding relating to matters under this Instrument in any court of any
other jurisdiction.

     

    31.           NOTICE.

     

    (a)           All
Notices, demands and other communications (“Notice”) under or concerning
this Instrument shall be in writing.  Each Notice shall be addressed
to the intended recipient at its address set forth in this Instrument, and shall
be deemed given on the earliest to occur of (i) the date when the Notice is
received by the addressee; (ii) the first Business Day after the Notice is
delivered to a recognized overnight courier service, with arrangements made for
payment of charges for next Business Day delivery; or (iii) the third Business
Day after the Notice is deposited in the United States mail with postage
prepaid, certified mail, return receipt requested.

     

    (b)           Any
party to this Instrument may change the address to which Notices intended for it
are to be directed by means of Notice given to the other party in accordance
with this Section 31.  Each party agrees that it will not refuse or
reject delivery of any Notice given in accordance with this Section 31, that it
will acknowledge, in writing, the receipt of any Notice upon request by the
other party and that any Notice rejected or refused by it shall be deemed for
purposes of this Section 31 to have been received by the rejecting party on the
date so refused or rejected, as conclusively established by the records of the
U.S. Postal Service or the courier service.

     

    (c)           Any
Notice under the Note and any other Loan Document that does not specify how
Notices are to be given shall be given in accordance with this Section
31.

     

    32.           SALE OF NOTE; CHANGE IN SERVICER;
LOAN SERVICING.  The Note or a partial interest in the Note
(together with this Instrument and the other Loan Documents) may be
sold one or more times without prior Notice to Borrower.  A sale may
result in a change of the Loan Servicer.  There also may be one or
more changes of the Loan Servicer unrelated to a

     

    
      
        
        

      

      
        
          
 PAGE 46

        
        

      

      
        
        

      

    

     

    sale of
the Note.  If there is a change of the Loan Servicer, Borrower will be
given Notice of the change. All actions regarding the servicing of the Loan
evidenced by the Note, including the collection of payments, the giving and
receipt of Notice, inspections of the Mortgaged Property, inspections of books
and records, and the granting of consents and approvals, may be taken by the
Loan Servicer unless Borrower receives Notice to the contrary.  If
Borrower receives conflicting Notices regarding the identity of the Loan
Servicer or any other subject, any such Notice from Lender shall
govern.

     

    33.           SINGLE PURPOSE
ENTITY.

     

    (a)           Until
the Indebtedness is paid in full, each Borrower and SPE Equity Owner shall
remain a Single Purpose Entity.

     

    (b)           A
“Single Purpose Entity”
means a corporation, limited partnership, or limited liability company which, at
all times since its formation and thereafter:

     

    
      	
               
      

            	
              (i)

            	
              shall
      not engage in any business or activity, other than the ownership,
      operation and maintenance of the Mortgaged Property and activities
      incidental thereto;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              shall
      not acquire, own, hold, lease, operate, manage, maintain, develop or
      improve any assets other than the Mortgaged Property and such Personalty
      as may be necessary for the operation of the Mortgaged Property and shall
      conduct and operate its business as presently conducted and
      operated;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              shall
      preserve its existence as an entity duly organized, validly existing and
      in good standing (if applicable) under the laws of the jurisdiction of its
      formation or organization and shall do all things necessary to observe
      organizational formalities;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              shall
      not merge or consolidate with any other
Person;

            


    

     

    
      	
               
      

            	
              (v)

            	
              shall
      not take any action to dissolve, wind-up, terminate or liquidate in whole
      or in part; to sell, transfer or otherwise dispose of all or substantially
      all of its assets; to change its legal structure; transfer or permit the
      direct or indirect transfer of any partnership, membership or other equity
      interests, as applicable, other than Transfers permitted hereunder; issue
      additional partnership, membership or other equity interests, as
      applicable; or seek to accomplish any of the
  foregoing;

            


    

     

    
      	
               
      

            	
              (vi)

            	
              shall
      not, without the prior unanimous written consent of all of the Borrower’s
      partners, members, or shareholders, as applicable, and, if applicable, the
      prior unanimous written consent of one hundred percent (100%) of the
      members of the board of directors or of the board of managers of the
      Borrower or the SPE Equity Owner:  (A) file any insolvency, or
      reorganization case or proceeding, to institute proceedings to have the
      Borrower or any SPE Equity Owner be adjudicated bankrupt or insolvent, (B)
      institute proceedings under any applicable insolvency law, (C) seek any
      relief under any law relating to relief from debts or the protection
      of debtors, (D) consent to the filing or institution of bankruptcy or
      insolvency proceedings against the Borrower or any SPE Equity Owner, (E)
      file a petition seeking, or consent to, reorganization or relief
      

            


    

    
       

      
        
          
          

        

        
          
            
 PAGE 47

          
          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 

              	
                with
      respect to the Borrower or any SPE Equity Owner under any applicable
      federal or state law relating to bankruptcy or insolvency, (F) seek or
      consent to the appointment of a receiver, liquidator, assignee, trustee,
      sequestrator, custodian, or any similar official for the Borrower or a
      substantial part of its property or for any SPE Equity Owner or a
      substantial part of its property, (G) make any assignment for the benefit
      of creditors of the Borrower or any SPE Equity Owner, (H) admit in writing
      the Borrower’s or any SPE Equity Owner’s inability to pay its debts
      generally as they become due, or (I) take action in furtherance of any of
      the foregoing;

              


      

    

     

    
      	
               
      

            	
              (vii)

            	
              shall
      not amend or restate its organizational documents if such change would
      modify the requirements set forth in this Section
  33;

            


    

     

    
      	
               
      

            	
              (viii)

            	
              shall
      not own any subsidiary or make any investment in, any other
      Person;

            


    

     

    
      	
               
      

            	
              (ix)

            	
              shall
      not commingle its assets with the assets of any other Person and shall
      hold all of its assets in its own
name;

            


    

     

    
      	
               
      

            	
              (x)

            	
              shall
      not incur any debt, secured or unsecured, direct or contingent (including,
      without limitation, guaranteeing any obligation), other than, (A) the
      Indebtedness (and any further indebtedness as described in Section 43 with
      regard to Supplemental Mortgages) and (B) customary unsecured trade
      payables incurred in the ordinary course of owning and operating the
      Mortgaged Property provided the same are not evidenced by a promissory
      note, do not exceed, in the aggregate, at any time a maximum amount of two
      percent (2%) of the original principal amount of the Indebtedness and are
      paid within sixty (60) days of the date
  incurred;

            


    

     

    
      	
               
      

            	
              (xi)

            	
              shall
      maintain its records, books of account, bank accounts, financial
      statements, accounting records and other entity documents separate and
      apart from those of any other Person and shall not list its assets as
      assets on the financial statement of any other Person; provided, however,
      that the Borrower’s assets may be included in a consolidated financial
      statement of its Affiliate provided that (A) appropriate notation shall be
      made on such consolidated financial statements to indicate the
      separateness of the Borrower from such Affiliate and to indicate that the
      Borrower’s assets and credit are not available to satisfy the debts and
      other obligations of such Affiliate or any other Person and (B) such
      assets shall also be listed on the Borrower’s own separate balance
      sheet;

            


    

     

    
      	
               
      

            	
              (xii)

            	
              except
      for capital contributions or capital distributions permitted under the
      terms and conditions of its organizational documents, shall only enter
      into any contract or agreement with any general partner, member,
      shareholder, principal or Affiliate of Borrower or any guarantor, or any
      general partner, member, principal or Affiliate thereof, upon terms and
      conditions that are commercially reasonable and substantially similar to
      those that would be available on an arm’s-length basis with third
      parties;

            


    

     

    
      	
               
      

            	
              (xiii)

            	
              shall
      not maintain its assets in such a manner that will be costly or difficult
      to segregate, ascertain or identify its individual assets from those of
      any other Person;

            


    

     

    
      
        
        

      

      
        
          
 PAGE 48

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (xiv)

            	
              shall
      not assume or guaranty (excluding any guaranty that has been executed and
      delivered in connection with the Note) the debts or obligations of any
      other Person, hold itself out to be responsible for the debts of another
      Person, pledge its assets to secure the obligations of any other Person or
      otherwise pledge its assets for the benefit of any other Person, or hold
      out its credit as being available to satisfy the obligations of any other
      Person;

            


    

     

    
      	
               
      

            	
              (xv)

            	
              shall
      not make or permit to remain outstanding any loans or advances to any
      other Person except for those investments permitted under the Loan
      Documents and shall not buy or hold evidence of indebtedness issued by any
      other Person (other than cash or investment-grade
    securities);

            


    

     

    
      	
               
      

            	
              (xvi)

            	
              shall
      file its own tax returns separate from those of any other Person, except
      to the extent that the Borrower is treated as a “disregarded entity” for
      tax purposes and is not required to file tax returns under applicable law,
      and shall pay any taxes required to be paid under applicable
      law;

            


    

     

    
      
        	
                 
      

              	
                      
                  (xvii)

                

              	
                      
                  shall
      hold itself out to the public as a legal entity separate and distinct from
      any other Person and conduct its business solely in its own name, shall
      correct any known misunderstanding regarding its separate identity and
      shall not identify itself or any of its Affiliates as a division or
      department of any other
Person;

                

              


      

    

     

    
      
        	
                 
      

              	
                      
                  (xviii)

                

              	
                      
                  shall
      maintain adequate capital for the normal obligations reasonably
      foreseeable in a business of its size and character and in light of its
      contemplated business operations and shall pay its debts and liabilities
      from its own assets as the same shall become
    due;

                

              


      

    

     

    
      	
               
      

            	
              (xix)

            	
              shall
      allocate fairly and reasonably shared expenses with Affiliates (including,
      without limitation, shared office space) and use separate stationery,
      invoices and checks bearing its own
name;

            


    

     

    
      	
               
      

            	
              (xx)

            	
              shall
      pay (or cause the Property Manager to pay on behalf of the Borrower from
      the Borrower’s funds) its own liabilities (including, without limitation,
      salaries of its own employees) from its own
  funds;

            


    

     

    
      	
               
      

            	
              (xxi)

            	
              shall
      not acquire obligations or securities of its partners, members,
      shareholders, or Affiliates, as
applicable;

            


    

     

    
      	
               
      

            	
              (xxii)

            	
              except
      as contemplated or permitted by the property management agreement with
      respect to the Property Manager, shall not permit any Affiliate or
      constituent party independent access to its bank
  accounts;

            


    

     

    
      	
               
      

            	
              (xxiii)

            	
              shall
      maintain a sufficient number of employees (if any) in light of its
      contemplated business operations and pay the salaries of its own
      employees, if any, only from its own
funds;

            


    

     

    
      	
               
      

            	
              (xxiv)

            	
              if
      such entity is a single member limited liability company, such entity
      shall (A) be formed and organized under Delaware law, (B) have either (1)
      one springing member that is a corporation whose stock is 100% owned by
      the sole member of Borrower and that satisfies the requirements for a
      

            


    

     

    
      
        
        

      

      
        
          
 PAGE 49

        
        

      

      
        
        

      

    

    
       

      
        	
                 
      

              	
                 

              	
                corporate
      springing member set forth below in this subsection or (2) two springing
      members who are natural persons and (C) otherwise comply with all Rating
      Agencies criteria for single member limited liability companies
      (including, without limitation, the delivery of Delaware single member
      limited liability company opinions acceptable in all respects to Lender
      and to the Rating Agencies).  If the springing member is a
      corporation, such springing member shall at all times comply, and will
      cause Borrower to comply, with each of the representations, warranties and
      covenants contained in this Section 33 as if such representation, warranty
      or covenant were made directly by such corporation.  If there is
      more than one springing member, only one springing member shall be the
      sole member of Borrower at any one time, and the second springing member
      shall become the sole member only upon the first springing member ceasing
      to be a member, so that at all times Borrower has one and only one
      member;

              


      

    

     

    
      	
               
      

            	
              (xxv)

            	
              if
      such entity is a single member limited liability company that is
      board-managed, such entity shall have a board of managers separate from
      that of guarantor and any other Person and shall cause its board of
      managers to keep minutes of board meetings and actions and observe all
      other Delaware limited liability company required formalities;
      and

            


    

     

    
      	
               
      

            	
              (xxvi)

            	
              if
      a SPE Equity Owner is required pursuant to Section 1(jjjj) of this
      Instrument, if the Borrower is (A) a limited liability company with more
      than one member, then the Borrower has and shall have at least one (1)
      member that is an SPE Equity Owner that has satisfied and shall satisfy
      the requirements of Section 33(c) below and such member is its managing
      member, or (B) a limited partnership, then all of its general partners are
      SPE Equity Owners that have satisfied and shall satisfy the requirements
      of Section 33(c) below.

            


    

     

    (c)           With
respect to each SPE Equity Owner, if applicable, a “Single Purpose Entity” means a
corporation or a Delaware single member limited liability company which, at all
times since its formation and thereafter complies in its own right (subject to
the modifications set forth below), and shall cause Borrower to comply, with
each of the requirements contained in Section 33(b).  Upon the
withdrawal or the disassociation of an SPE Equity Owner from Borrower, Borrower
shall immediately appoint a new SPE Equity Owner, whose organizational documents
are substantially similar to those of the withdrawn or disassociated SPE Equity
Owner, and deliver a new nonconsolidation opinion to the Rating Agencies and
Lender in form and substance satisfactory to Lender and to the Rating Agencies
(unless the opinion is waived by the Rating Agencies), with regard to
nonconsolidation by a bankruptcy court of the assets of each of the Borrower and
SPE Equity Owner with those of its Affiliates.

     

    
      	
               
      

            	
              (i)

            	
              With
      respect to Sections 33(b)(i) and 33(b)(x) the SPE Equity Owner shall not
      engage in any business or activity other than being the sole managing
      member or general partner, as the case may be, of the Borrower and owning
      at least a 0.5% equity interest in
Borrower;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              With
      respect to Section 33(b)(ii), the SPE Equity Owner has not and shall not
      acquire or own any assets other than its equity interest in the Borrower
      and personal property related thereto;
and

            


    

     

    
      
        
        

      

      
        
          
 PAGE 50

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iii)

            	
              With
      respect to Section 33(b)(viii), the SPE Equity Owner shall not own any
      subsidiary or make any investment in any other Person, except for
      Borrower;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              With
      respect to Section 33(b)(xiv), the SPE Equity Owner shall not assume or
      guaranty the debts or obligations of any other Person, hold itself out to
      be responsible for the debts of another Person, pledge its assets to
      secure the obligations of any other Person or otherwise pledge its assets
      for the benefit of any other Person, or hold out its credit as being
      available to satisfy the obligations of any other Person, except for in
      its capacity as general partner of the Borrower (if
      applicable);

            


    

     

    
      	
               
      

            	
              (v)

            	
              With
      respect to Section 33(b)(x), the SPE Equity Owner has not and shall not
      incur any debt, secured or unsecured, direct or contingent (including,
      without limitation, guaranteeing any obligation), other than (A) customary
      unsecured payables incurred in the ordinary course of owning the Borrower
      provided the same are not evidenced by a promissory note, do not exceed,
      in the aggregate, at any time a maximum amount of $10,000 and are paid
      within sixty (60) days of the date incurred and (B) except in its capacity
      as general partner of the Borrower (if
  applicable).

            


    

     

        (d)           [INTENTIONALLY
DELETED]

     

    (e)           Notwithstanding
anything to the contrary in this Instrument, no Transfer will be permitted under
Sections 21(c), (d), (e) or (f) unless the provisions of this Section 33 are
satisfied at all times.

     

    34.           SUCCESSORS AND ASSIGNS
BOUND.  This Instrument shall bind, and the rights granted by
this Instrument shall inure to, the respective successors and assigns of Lender
and Borrower.  However, a Transfer not permitted by Section 21 shall
be an Event of Default.

     

    35.           JOINT AND SEVERAL
LIABILITY.  If more than one Person signs this Instrument as
Borrower, the obligations of such Persons shall be joint and
several.

     

    36.           RELATIONSHIP
OF PARTIES; NO THIRD PARTY BENEFICIARY.

     

    (a)           The
relationship between Lender and Borrower shall be solely that of creditor and
debtor, respectively, and nothing contained in this Instrument shall create any
other relationship between Lender and Borrower.

     

    (b)           No
creditor of any party to this Instrument and no other Person shall be a third
party beneficiary of this Instrument or any other Loan
Document.  Without limiting the generality of the preceding sentence,
(i) any arrangement (a “Servicing Arrangement”)
between the Lender and any Loan Servicer for loss sharing or interim advancement
of funds shall constitute a contractual obligation of such Loan Servicer that is
independent of the obligation of Borrower for the payment of the Indebtedness,
(ii) Borrower shall not be a third party beneficiary of any
Servicing Arrangement, and (iii) no payment by the Loan Servicer under any
Servicing Arrangement will reduce the amount of the Indebtedness.

     

    37.           SEVERABILITY;
AMENDMENTS.  The invalidity or unenforceability of any
provision of this Instrument shall not affect the validity or enforceability of
any other provision, and all other provisions shall remain in full force and
effect.  This Instrument contains the entire

     

    
      
        
        

      

      
        
          
 PAGE 51

        
        

      

      
        
        

      

    

     

    agreement
among the parties as to the rights granted and the obligations assumed in this
Instrument.  This Instrument may not be amended or modified except by
a writing signed by the party against whom enforcement is sought; provided,
however, that in the event of a Transfer prohibited by or requiring Lender’s
approval under Section 21, any or some or all of the Modifications to Instrument
set forth in Exhibit B (if any) may be modified or rendered void by Lender at
Lender’s option by Notice to Borrower and the transferee(s).

     

    38.           CONSTRUCTION.  The
captions and headings of the Sections of this Instrument are for convenience
only and shall be disregarded in construing this Instrument.  Any
reference in this Instrument to an “Exhibit” or a “Section” shall, unless
otherwise explicitly provided, be construed as referring, respectively, to an
Exhibit attached to this Instrument or to a Section of this
Instrument.  All Exhibits attached to or referred to in this
Instrument are incorporated by reference into this Instrument.  Any
reference in this Instrument to a statute or regulation shall be construed as
referring to that statute or regulation as amended from time to
time.  Use of the singular in this Agreement includes the plural and
use of the plural includes the singular.  As used in this Instrument,
the term “including” means “including, but not limited to.”

     

    39.           DISSEMINATION OF
INFORMATION.  Borrower acknowledges that Lender may provide to
third parties with an existing or prospective interest in the servicing,
enforcement, evaluation, performance, ownership, purchase, participation or
Securitization of the Loan, including, without limitation, any of the Rating
Agencies, any entity maintaining databases on the underwriting and performance
of commercial mortgage loans, as well as governmental regulatory agencies having
regulatory authority over Lender, any and all information which Lender now has
or may hereafter acquire relating to the Loan, the Mortgaged Property, Borrower,
any SPE Equity Owner or any guarantor, as Lender determines necessary or
desirable and that such information may be included in disclosure documents in
connection with a  Securitization or syndication of participation
interests, including, without limitation, a prospectus, prospectus supplement,
offering memorandum, private placement memorandum or similar document (each, a
“Disclosure Document”)
and also may be included in any filing with the Securities and Exchange
Commission pursuant to the Securities Act or the Securities Exchange
Act.  To the fullest extent permitted under applicable law, Borrower
irrevocably waives all rights, if any, to prohibit such disclosure, including,
without limitation, any right of privacy.

     

    40.           NO CHANGE IN FACTS OR
CIRCUMSTANCES.  Borrower warrants that (a) all information in
the application for the Loan submitted to Lender (the “Loan Application”) and in all
financial statements, Rent Schedules, reports, certificates and other documents
submitted in connection with the Loan Application are complete and accurate in
all material respects; and (b) there has been no material adverse change in any
fact or circumstance that would make any such information incomplete or
inaccurate.

     

    41.           SUBROGATION.  If,
and to the extent that, the proceeds of the Loan evidenced by the Note, or
subsequent advances under Section 12, are used to pay, satisfy or discharge a
Prior Lien, such Loan proceeds or advances shall be deemed to have been advanced
by Lender at Borrower's request, and Lender shall automatically, and without
further action on its part, be subrogated
to the rights, including lien priority, of the owner or holder of the obligation
secured by the Prior Lien, whether or not the Prior Lien is
released.

     

    42.           [INTENTIONALLY
DELETED]

     

    43.           SUPPLEMENTAL
FINANCING.

     

    
      
        
        

      

      
        
          
 PAGE 52

        
        

      

      
        
        

      

    

     

    (a)           This
Section shall apply only if at the time of any application referred to below,
the Federal Home Loan Mortgage Corporation (“Freddie Mac”) has in effect a
product described in its Multifamily Seller/Servicer
Guide under which it purchases supplemental mortgages on multifamily
properties that meet specified criteria (a “Supplemental Mortgage
Product”).

     

    (b)           After
the first anniversary of the date of this Instrument (the “First Mortgage”), Freddie Mac
will consider an application from an originating lender that is generally
approved by Freddie Mac to sell mortgages to Freddie Mac under the Supplemental
Mortgage Product (an “Approved
Seller/Servicer”) for the purchase by Freddie Mac of a proposed
indebtedness of Borrower to the Approved Seller/Servicer to be secured by one or
more supplemental mortgages on the Mortgaged Property (such indebtedness and
supplemental mortgages being referred to together as a “Supplemental
Mortgage”).  Freddie Mac will purchase each Supplemental
Mortgage secured by the Mortgaged Property if the following conditions are
satisfied:

     

    
      	
               
      

            	
              (i)

            	
              At
      the time of the proposed Supplemental Mortgage, no Event of Default shall
      have occurred and be continuing and no event or condition shall have
      occurred and be continuing that, with the giving of Notice or the passage
      of time, or both, would become an Event of
  Default;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Borrower
      and the Mortgaged Property must be acceptable to Freddie Mac under its
      Supplemental Mortgage Product;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              New
      loan documents must be entered into to reflect each Supplemental Mortgage,
      such documents to be acceptable to Freddie Mac in its sole
      discretion;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              Each
      Supplemental Mortgage will not cause the combined debt service coverage
      ratio of the Mortgaged Property after each Supplemental Mortgage to be
      less than 1.25:1, subject to increase in accordance with Freddie Mac’s
      then-current policies (“Required DSCR”), as
      determined by Freddie Mac. As used in this Section, the term “combined
      debt service coverage ratio” means, with respect to the Mortgaged
      Property, the ratio of (A) the annual net operating income from the
      operations of the Mortgaged Property at the time of the proposed
      Supplemental Mortgage to (B) the aggregate of the annual principal and
      interest payable on (I) the Indebtedness under this Instrument (using a
      30-year amortization schedule), (II) any “Indebtedness” as defined in any
      security instruments recorded against the Mortgaged Property (using a
      30-year amortization schedule for any Supplemental Mortgages) and (III)
      the proposed “Indebtedness” for any Supplemental Mortgage (using a 30-year
      amortization schedule). The annual net operating income of the Mortgaged
      Property will be as determined by Freddie Mac in its sole discretion
      considering factors such as income in place at the time of the
      proposed Supplemental
      Mortgage and income during the preceding twelve (12) months, and actual,
      historical and anticipated operating expenses.  Freddie Mac
      shall determine the combined debt service coverage ratio of the Mortgaged
      Property based on its underwriting.  Borrower shall provide
      Freddie Mac such financial statements and other information Freddie Mac
      may require to make these
determinations;

            


    

     

    
      
        
        

      

      
        
          
 PAGE 53

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (v)

            	
              Each
      Supplemental Mortgage will not cause the combined loan to value ratio of
      the Mortgaged Property after each Supplemental Mortgage to exceed 72% (“Required LTV”), as
      determined by Freddie Mac.  As used in this Section, “combined
      loan to value ratio” means, with respect to the Mortgaged Property, the
      ratio, expressed as a percentage, of (A) the aggregate outstanding
      principal balances of (I) the Indebtedness under this Instrument, (II) any
      “Indebtedness” as defined in any security instruments recorded against the
      Mortgaged Property and (III) the proposed “Indebtedness” for any
      Supplemental Mortgage, to (B) the value of the Mortgaged
      Property.  Freddie Mac shall determine the combined loan to
      value ratio of the Mortgaged Property based on its
      underwriting.  Borrower shall provide Freddie Mac such financial
      statements and other information Freddie Mac may require to make these
      determinations.  In addition, Freddie Mac, at Borrower’s
      expense, may obtain MAI appraisals of the Mortgaged Property in order to
      assist Freddie Mac in making the determinations hereunder.  If
      Freddie Mac requires an appraisal, then the value of the Mortgaged
      Property that will be used to determine whether the Required LTV has been
      met shall be the lesser of (A) the appraised value set forth in such
      appraisal or (B) the value of the Mortgaged Property as determined by
      Freddie Mac;

            


    

     

    
      	
               
      

            	
              (vi)

            	
              The
      Borrower’s organizational documents are amended to permit the Borrower to
      incur additional debt in the form of Supplemental Mortgages (Lender shall
      consent to such amendment(s));

            


    

     

    
      	
               
      

            	
              (vii)

            	
              One
      or more natural persons or entities acceptable to Freddie Mac executes and
      delivers to the Approved Seller/Servicer a guaranty in a form acceptable
      to Freddie Mac with respect to the exceptions to non-recourse liability
      described in Freddie Mac’s form promissory note, unless Freddie Mac has
      elected to waive its requirement for a
guaranty;

            


    

     

    
      	
               
      

            	
              (viii)

            	
              The
      loan term of each Supplemental Mortgage shall be coterminous with the
      First Mortgage or longer than the First Mortgage, including any “Extension
      Period” described in the Note secured by the First Mortgage, at Freddie
      Mac’s discretion;

            


    

     

    
      	
               
      

            	
              (ix)

            	
              The
      Prepayment Premium Period (as defined in the Note) of each Supplemental
      Mortgage shall be coterminous with the Prepayment Premium Period or the
      combined Lockout Period and Defeasance Period (all, as defined in the
      Note), as applicable, of the First
Mortgage;

            


    

     

    
      	
               
      

            	
              (x)

            	
              The
      interest rate of each Supplemental Mortgage will be determined by Freddie
      Mac in its sole and absolute
discretion;

            


    

     

    
      	
               
      

            	
              (xi)

            	
              The
      Lender enters into an intercreditor agreement (“Intercreditor
      Agreement”) acceptable to Freddie Mac and to Lender for each
      Supplemental Mortgage;

            


    

     

    
      	
               
      

            	
              (xii)

            	
              Borrower’s
      payment of fees and other expenses charged by Lender, Freddie Mac, the
      Approved Seller/Servicer, and the Rating Agencies (including reasonable
      Attorneys’ Fees and Costs) in connection with reviewing and originating
      each Supplemental Mortgage;

            


    

     

    
      
        
        

      

      
        
          
 PAGE 54

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (xiii)

            	
              Notwithstanding
      anything to the contrary in Section 7 of this Instrument, Borrower shall
      make deposits under this First Mortgage for the payment of any
      Impositions, so long as a Supplemental Mortgage is outstanding, and such
      deposits shall be credited to the payment of such Impositions under any
      Supplemental Mortgage;

            


    

     

    
      	
               
      

            	
              (xiv)

            	
              If
      any Supplemental Mortgage is outstanding, the Borrower must obtain the
      consent of the lender for each Supplemental Mortgage prior to agreeing to
      any modifications or amendments to the Loan
  Documents;

            


    

     

    
      	
               
      

            	
              (xv)

            	
              All
      other requirements of the Supplemental Mortgage Product must be met,
      unless Freddie Mac has elected to waive one or more of its
      requirements.

            


    

     

    (c)           No
later than 5 Business Days after Lender’s receipt of a written request from
Borrower, Lender shall provide the following information to an Approved
Seller/Servicer upon Borrower’s written request.  Lender shall only be
obligated to provide this information in connection with Borrower’s request for
a Supplemental Mortgage from an Approved Seller/Servicer; provided, however, if
Freddie Mac is the owner of the Note, Lender shall not be obligated to provide
such information:

     

    
      	
               
      

            	
              (i)

            	
              the
      then-current outstanding principal balance of the First
      Mortgage;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              payment
      history of the First Mortgage;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              whether
      taxes, insurance, ground rents, replacement reserves, repair escrows, or
      other escrows are being collected on the First Mortgage and the amount of
      each such escrow as of the date of the
request;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              whether
      any repairs, capital replacements or improvements or rental achievement or
      burn-off guaranty requirements are existing or outstanding under the terms
      of the First Mortgage;

            


    

     

    
      	
               
      

            	
              (v)

            	
              a
      copy of the most recent inspection report for the Mortgaged
      Property;

            


    

     

    
      	
               
      

            	
              (vi)

            	
              whether
      any modifications or amendments have been made to the Loan Documents for
      the First Mortgage since origination of the First Mortgage and, if
      applicable, a copy of such modifications and amendments;
    and

            


    

     

    
      	
               
      

            	
              (vii)

            	
              whether
      to Lender’s knowledge any Event of Default exists under the First
      Mortgage.

            


    

     

        
(d)     
Lender
shall have no obligation to consent to any mortgage or lien on the Mortgaged
Property that secures any indebtedness other than the Indebtedness, except as
set forth herein.

     

    (e)           If
a Supplemental Mortgage is made to Borrower, Borrower agrees that the terms of
the Intercreditor Agreement shall govern with respect to any distributions of
excess proceeds by Lender to the Approved Seller/Servicer, Freddie Mac or their
successors and/or assigns (collectively, the “Junior Lender”), and Borrower
agrees that Lender may distribute any excess proceeds received by Lender
pursuant to the Loan Documents to Junior Lender pursuant to the Intercreditor
Agreement.

     

    
      
        
        

      

      
        
          
 PAGE 55

        
        

      

      
        
        

      

    

     

    44.           DEFEASANCE (Section Applies if Loan
is Assigned to REMIC Trust Prior to the Cut-off Date).  This
Section 44 shall apply in the event the Note is assigned to a REMIC trust prior
to the Cut-off Date, and, subject to Section 44(a) and (c) below, Borrower shall
have the right to defease the Loan in whole (“Defeasance”) and obtain the
release of the Mortgaged Property from the lien of this Instrument upon the
satisfaction of the following conditions:

    


    (a)           Borrower
shall not have the right to obtain Defeasance at any of the following
times:

    


    
      	
               
      

            	
              (i)

            	
              if
      the Loan is not assigned to a REMIC
trust;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              during
      the Lockout Period (as defined in the
Note);

            


    

    


    
      	
               
      

            	
              (iii)

            	
              after
      the expiration of the Defeasance Period (as defined in the Note);
      or

            


    

    


    
      	
               
      

            	
              (iv)

            	
              after
      Lender has accelerated the maturity of the unpaid principal balance of,
      accrued interest on, and other amounts payable under, the Note pursuant to
      Section 6 of the Note.

            


    

    


    (b)           Borrower
shall give Lender Notice (the “Defeasance Notice”)
specifying a Business Day (the “Defeasance Closing Date”) on
which Borrower desires to close the Defeasance.  The Defeasance
Closing Date specified by Borrower may not be more than 60 calendar days, nor
less than 30 calendar days, after the date on which the Defeasance Notice is
received by Lender.  Lender will acknowledge receipt of the Defeasance
Notice and will state in such receipt whether Lender will designate the
Successor Borrower or will permit Borrower to designate the Successor
Borrower.

    


    (c)           The
Defeasance Notice must be accompanied by a $10,000 non-refundable fee (the
“Defeasance
Fee”).  If Lender does not receive the Defeasance Fee, then
Borrower’s right to obtain Defeasance pursuant to that Defeasance Notice shall
terminate.

    


    
      	
               
      

            	
              (d)

            	
              (i)

            	
              If
      Borrower timely pays the Defeasance Fee, but Borrower fails to perform its
      other obligations hereunder, Lender shall have the right to retain the
      Defeasance Fee as liquidated damages for Borrower’s default and, except as
      provided in Section 44(d)(ii), Borrower shall be released from all further
      obligations under this Section 44.  Borrower acknowledges that
      Lender will incur financing costs in arranging and preparing for the
      release of the Mortgaged Property from the lien of this Instrument in
      reliance on the executed Defeasance Notice.  Borrower agrees
      that the Defeasance
      Fee represents a fair and reasonable estimate, taking into account all
      circumstances existing on the date of this Instrument, of the damages
      Lender will incur by reason of Borrower’s
  default.

            


    

    


    
      	
               
      

            	
              (ii)

            	
              In
      the event that the Defeasance is not consummated on the Defeasance Closing
      Date for any reason, Borrower agrees to reimburse Lender for all third
      party costs and expenses (other than financing costs covered by Section
      44(d)(i) above) incurred by Lender in reliance on the executed Defeasance
      Notice, within 5 Business Days after Borrower receives a written demand
      for payment, accompanied by a statement, in reasonable detail, of Lender’s
      third party costs and expenses.

            


    

     

    
      
        
        

      

      
        
          
 PAGE 56

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iii)

            	
              All
      payments required to be made by Borrower to Lender pursuant to this
      Section 44 shall be made by wire transfer of immediately available funds
      to the account(s) designated by Lender in its acknowledgement of the
      Defeasance Notice.

            


    

    


    (e)           No
Event of Default has occurred and is continuing.

    


    (f)           The
documents required to be delivered to Lender on or prior to the Defeasance
Closing Date are:

    


    
      	
               
      

            	
              (i)

            	
              an
      opinion of counsel for Borrower, in form and substance satisfactory to
      Lender, to the effect that Lender has a valid and perfected lien and
      security interest of first priority in the Defeasance Collateral and the
      proceeds thereof;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              an
      opinion of counsel for Borrower, in form and substance satisfactory to
      Lender, to the effect that the Pledge Agreement is duly authorized,
      executed, delivered and enforceable against Borrower in accordance with
      the respective terms;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              unless
      waived by Lender or unless Lender designates the Successor Borrower, an
      opinion of counsel for Successor Borrower, in form and substance
      satisfactory to Lender, to the effect that the Transfer and Assumption
      Agreement is duly authorized, executed, delivered and enforceable against
      Successor Borrower in accordance with the respective
  terms;

            


    

    


    
      	
               
      

            	
              (iv)

            	
              unless
      waived by Lender or unless Lender designates the Successor Borrower, an
      opinion of counsel for Successor Borrower, in form and substance
      satisfactory to Lender, to the effect that the Successor Borrower has been
      validly created;

            


    

    


    
      	
               
      

            	
              (v)

            	
              if
      Borrower designates the Successor Borrower, an opinion of counsel for
      Successor Borrower, in form and substance satisfactory to Lender and to
      the Rating Agencies, with regard to nonconsolidation of the assets of the
      Successor Borrower with those of its Affiliates by a bankruptcy
      court;

            


    

    


    
      	
               
      

            	
              (vi)

            	
              unless
      waived by Lender, an opinion of counsel for Borrower, in form and
      substance satisfactory to Lender, to the effect
  that:

            


    

     

    
      	
               
      

            	
              (A)

            	
              if,
      as of the Defeasance Closing Date, the Note is held by a REMIC trust, (1)
      the Defeasance has been effected in accordance with the requirements of
      Treasury Regulation Section 1.860G-2(a)(8) (as such regulation may be
      modified, amended or replaced from time to time), (2) the qualification
      and status of the REMIC trust as a REMIC will not be adversely affected or
      impaired as a result of the Defeasance, and (3) the REMIC trust will not
      incur a tax under Section 860G(d) of the Tax Code as a result of the
      Defeasance, and

            


    

     

    
      
        
        

      

      
        
          
 PAGE 57

        
        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (B)

            	
              the
      Defeasance will not result in a “sale or exchange” of the Note within the
      meaning of Section 1001(c) of the Tax Code and the temporary and final
      regulations promulgated thereunder;

            


    

    


    
      	
               
      

            	
              (vii)

            	
              if
      any certificates evidencing the Securitization remain outstanding, a
      Rating Confirmation;

            


    

    


    
      	
               
      

            	
              (viii)

            	
              unless
      waived by Lender, a written certificate from an independent certified
      public accounting firm (reasonably acceptable to Lender), confirming that
      the Defeasance Collateral will generate cash sufficient to make all
      Scheduled Debt Payments as they fall due under the Note, including full
      payment due on the Note on the Maturity
Date;

            


    

     

    
      	
               
      

            	
              (ix)

            	
              Lender’s
      form of a pledge and security agreement (“Pledge Agreement”) and
      financing statements which pledge and create a first priority security
      interest in the Defeasance Collateral in favor of
  Lender;

            


    

     

    
      	
               
      

            	
              (x)

            	
              Lender’s
      form of a transfer and assumption agreement (“Transfer and Assumption
      Agreement”), whereupon Borrower and any guarantor (in each case,
      subject to satisfaction of all requirements hereunder) shall be
      relieved from
      liability in connection with the Loan (other than any liability under
      Section 18 of this Instrument for events that occur prior to the
      Defeasance Closing Date, whether discovered before or after the Defeasance
      Closing Date) and Successor Borrower shall assume all remaining
      obligations;

            


    

     

    
      	
               
      

            	
              (xi)

            	
              Forms
      of all documents necessary to release the Mortgaged Property from the
      liens created by this Instrument and related UCC financing statements
      (collectively, “Release
      Instruments”), each in appropriate form required by the state in
      which the Property is located;
      and

            


    

     

    
      	
               
      

            	
              (xii)

            	
              such
      other opinions, certificates, documents or instruments as Lender may
      reasonably request;

            


    

     

    (g)           Borrower
shall deliver to Lender on or prior to the Defeasance Closing Date:

     

    
      	
               
      

            	
              (i)

            	
              The
      Defeasance Collateral which meets all requirements of Section 44(g)(ii)
      below and is owned by Borrower, free and clear of all liens and claims of
      third-parties;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              The
      Defeasance Collateral must be in an amount to provide for (A) redemption
      payments to occur prior, but as close as possible, to all successive
      Installment Due Dates occurring under the Note after the Defeasance
      Closing Date and (B) deliver redemption proceeds at least equal to the
      amount of principal and interest due on the Note on each Installment Due
      Date including full payment due on the Note on the Maturity Date (“Scheduled Debt
      Payments”).  The Defeasance Collateral shall be arranged
      such that redemption payments received from the Defeasance Collateral are
      paid directly to Lender to be applied on account of the Scheduled Debt
      Payments.  Unless otherwise agreed in writing by Lender, the
      pledge of the Defeasance Collateral shall be
  effectuated

            


    

     

    
      
        
        

      

      
        
          
 PAGE 58

        
        

      

      
        
        

      

    

    
       

      
        	
                 
      

              	
                 

              	
                through
      the book-entry facilities of a qualified securities intermediary
      designated by Lender in conformity with all applicable laws;
      and

              


      

    

     

    
      	
               
      

            	
              (iii)

            	
              All
      accrued and unpaid interest and all other sums due under the Note, this
      Instrument and under the other Loan Documents, including, without
      limitation, all amounts due under Section 44(i) below, up to the
      Defeasance Closing Date shall be paid in full on or prior to the
      Defeasance Closing Date.

            


    

     

    (h)           If
Lender permits Borrower to designate the Successor Borrower, then Borrower
shall, at Borrower’s expense, designate or establish an accommodation borrower
(“Successor Borrower”)
satisfactory to Lender (or Lender, at its option, may designate the Successor
Borrower) which satisfies Lender’s then current requirements for a “Single
Purpose Entity” to assume at the time of Defeasance ownership of the Defeasance
Collateral and liability for all of Borrower’s obligations under the Pledge
Agreement and the Loan Documents (to the extent that liability thereunder
survives release of this Instrument).  Borrower shall pay to Successor
Borrower a fee of $1,000.00 as consideration of Successor Borrower’s assumption
of Borrower’s obligations under the Loan Documents.  Notwithstanding
any contrary provision hereunder, no Transfer fee is payable to Lender upon a
Transfer of the Loan in accordance with this Section.

    


    (i)           Borrower
shall pay all reasonable costs and expenses incurred by Lender in connection
with the Defeasance in full on or prior to the Defeasance Closing Date, which
payment is required prior to Lender’s issuance of the Release Instruments and
whether or not Defeasance is completed.  Such expenses include,
without limitation, all fees, costs and expenses incurred by Lender and its
agents in connection with the Defeasance (including, without limitation,
reasonable Attorneys’ Fees and Costs for the review and preparation of the
Pledge Agreement and of the other materials described herein and any related
documentation, and any servicing fees, Rating Agencies’ fees or other costs
related to the Defeasance); the cost incurred by Lender to obtain a Rating
Confirmation contemplated hereunder; reasonable Attorneys’ Fees and Costs; and a
processing fee to cover Lender’s administrative costs to process Borrower’s
Defeasance request.  Lender reserves the right to require that
Borrower post a deposit to cover costs which Lender reasonably anticipates will
be incurred.

    


    45.           INTENTIONALLY
DELETED.

    


    46.           LENDER’S RIGHTS TO SELL OR
SECURITIZE.  Borrower acknowledges that Lender, and each
successor to Lender’s interest, may (without prior Notice to Borrower or
Borrower’s prior consent), sell or grant participations in the Loan (or any part
thereof), sell or subcontract the servicing rights related to the Loan,
securitize the Loan or include the Loan as part of a trust.  Borrower,
at its expense, agrees to cooperate with all reasonable requests of Lender in
connection with any of the foregoing including, without limitation, executing
any financing statements or other documents deemed necessary by Lender or its
transferee to create, perfect or preserve the rights and interest to be acquired
by such transferee, providing any updated financial information with appropriate
verification through auditors letters, delivering a so called “10b-5” opinion,
revised organizational documents and counsel opinions satisfactory to the Rating
Agencies, executed amendments to the Loan Documents, and review information
contained in a preliminary or final private placement memorandum, prospectus,
prospectus supplements or other Disclosure Document, and providing a mortgagor
estoppel certificate and such other information about Borrower, any SPE Equity
Owner, any guarantor, any Property Manager or the Mortgaged Property as Lender
may require for Lender’s offering materials.

     

    
      
        
        

      

      
        
          
 PAGE 59

        
        

      

      
        
        

      

    

    


    47.           SECURITIZATION
INDEMNIFICATION.  Borrower and each guarantor agree to provide
in connection with each Disclosure Document, an indemnification certificate: (a)
certifying that all sections of such Disclosure Document relating to Borrower,
any SPE Equity Owner, any guarantors, any Property Manager, their respective
Affiliates, the Loan, the Loan Documents and the Mortgaged Property, and any
risks or special considerations relating thereto, including, without limitation,
the sections entitled “Special Considerations,” and/or “Risk Factors,” and
“Certain Legal Aspects of the Mortgage Loan,” or similar sections, as such
sections relate thereto, have been carefully examined, and that, to the best of
such indemnitor’s knowledge, such sections (and any other sections reasonably
requested) do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading; (b)
indemnifying Lender (and for purposes of this Section 47, Lender shall include
its officers and directors) and any Affiliate of Lender that (i) has filed the
registration statement, if any, relating to the Securitization and/or (ii) which
is acting as issuer, depositor, sponsor and/or in a similar capacity with
respect to the Securitization (any entity described in (i) or (ii), an “Issuer Person”), and each
director and officer of any Issuer Person, and each entity who Controls any
Issuer Person within the meaning of Section 15 of the Securities Act or Section
20 of the Securities Exchange Act (collectively, “Issuer Group”), and each
entity which is acting as an underwriter, manager, placement agent, initial
purchaser or in a similar capacity with respect to the Securitization, each of
its directors and officers and each entity who Controls any such entity within
the meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act which is acting as an underwriter, manager, placement agent,
initial purchaser or in a similar capacity with respect to the Securitization,
each of its directors and officers and each entity who Controls any such entity
within the meaning of Section 15 of the Securities Act and Section 20 of the
Securities Exchange Act (collectively, “Underwriter Group”) for any
losses to which Lender, the Issuer Group or the Underwriter Group may become
subject insofar as the losses arise out of or are based upon any untrue
statement of any material fact contained in such section or arise out of or are
based upon the omission to state therein a material fact required to be stated
in such sections necessary in order to make the statements in such sections or
in light of the circumstances under which they were made, not misleading
(collectively, “Securities
Liabilities”); and (c) agreeing to reimburse Lender, the Issuer Group and
the Underwriter Group for any legal or other expenses reasonably incurred by
Lender, the Issuer Group and the Underwriter Group in investigating or defending
the Securities Liabilities; provided, however, that indemnitor will be liable
under clauses (b) or (c) above only to the extent that such Securities
Liabilities arise out of, or are based upon, any such untrue statement or
omission made therein in reliance upon, and in conformity with, information
furnished to Lender or any member of the Issuer Group or Underwriter Group by or
on behalf of Borrower or a guarantor in connection with the preparation of the
Disclosure Documents or in connection with the underwriting of the Loan,
including, without limitation, financial statements of Borrower, any SPE Equity
Owner or any guarantor, and operating statements, rent rolls, environmental site
assessment
reports and property condition reports with respect to the Mortgaged Property
(other than any such misstatements contained in (or omissions from) third party
reports prepared by third parties not affiliated directly or indirectly with
Borrower).  This indemnity is in addition to any liability which
Borrower may otherwise have and shall be effective whether or not an
indemnification certificate described above is provided and shall be applicable
based on information previously provided by or on behalf of Borrower or a
guarantor if the indemnification certificate is not
provided.  Notwithstanding the foregoing, any indemnification
certificate may expressly exclude any information contained in third party
reports prepared by parties that are not Affiliates of Borrower or any guarantor
(“Third Party
Information”), and the obligations and liability of Borrower and any
guarantor pursuant to this Section shall not extend to the Third Party
Information.

    


    
      
        
        

      

      
        
          
 PAGE 60

        
        

      

      
        
        

      

    

     

    48.           WARRANTIES OF
BORROWER.  Borrower, for itself and its successors and assigns,
does hereby represent, warrant and covenant to and with Lender, its successors
and assigns, that:

    


    (a)           The
representations, warranties and covenants contained in this Instrument survive
for as long as any Indebtedness remains outstanding;

    


    (b)           None
of the items shown in the Schedule of Title Exceptions will materially or
adversely affect (i) the ability of the Borrower to pay the Loan in full, (ii)
the use for which all or any part of the Mortgaged Property is being used at the
time this Instrument was executed, except as set forth in Section 11 of this
Instrument, (iii) the operation of the Mortgaged Property or (iv) the value of
the Mortgaged Property;

    


    (c)           Borrower
is not an “investment company”, or a company Controlled by an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as
amended;

    


    (d)           Borrower
is not an “employee benefit plan,” as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), which is subject to
Title I of ERISA and the assets of Borrower do not constitute “plan assets” of
one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101;

    


    (e)           Borrower
will give prompt written Notice to Lender of any litigation or governmental
proceedings pending or, to the best of Borrower’s knowledge, threatened (in
writing) against Borrower which might have a Material Adverse Effect as defined
below.

    


    (f)           There
are no judicial, administrative, mediation or arbitration actions, suits or
proceedings pending or, to the best of Borrower’s knowledge, threatened (in
writing) against or affecting Borrower (and, if Borrower is a limited
partnership, any of its general partners or if Borrower is a limited liability
company, any member of Borrower) or the Mortgaged Property which, if adversely
determined, would have a material adverse effect on (i) the Mortgaged
Property, (ii) the business, prospects, profits, operations or condition
(financial or otherwise) of Borrower, (iii) the enforceability, validity,
perfection or priority of the lien of any Loan Document, or (iv) the
ability of Borrower to perform any obligations under any Loan Document
(collectively, a “Material
Adverse Effect”).

    


    (g)           With
regard to ERISA:

              

    
      
        	
                 
      

              	
                (i)

              	
                 Borrower
      shall not engage in any transaction which would cause an obligation, or
      action taken or to be taken, hereunder (or the exercise by Lender of any
      of its rights under the Note, this Instrument or any of the other Loan
      Documents) to be a non-exempt (under a statutory or administrative class
      exemption) prohibited transaction under
ERISA.

              


      

    

     

    
      	
               
      

            	
              (ii)

            	
              Borrower
      further covenants and agrees to deliver to Lender such certifications or
      other evidence from time to time throughout the term of this Instrument,
      as requested by Lender in its sole discretion, that (A) Borrower is not an
      “employee benefit plan” as defined in Section 3(e) of ERISA, which is
      subject to Title I of ERISA, or a “governmental plan” within the meaning
      of Section 3(3) of ERISA; (B) Borrower is not subject to state statutes
      regulating investments and fiduciary obligations with
  

            


    

     

    
      
        
        

      

      
        
          
 PAGE 61

        
        

      

      
        
        

      

    

    
       

      
        	
                 
      

              	
                respect
      to governmental plans; and (C) one or more of the following circumstances
      is true:

              


      

    

     

    
      	
               
      

            	
              (1)

            	
              Equity
      interests in Borrower are publicly offered securities within the meaning
      of 29 C.F.R. Section 2510.3-101(b)(2), as amended from time to time or any
      successor provision;

            


    

    


    
      	
               
      

            	
              (2)

            	
              Less
      than twenty-five percent (25%) of each outstanding class of equity
      interests in Borrower are held by “benefit plan investors” within the
      meaning of 29 C.F.R. 2510.3-101(f)(2), as amended from time to time or any
      successor provision; or

            


    

    


    
      	
               
      

            	
              (3)

            	
              Borrower
      qualifies as an “operating company” or a “real estate operating company”
      within the meaning of 29 C.F.R. Section 2510.3-101(c), as amended from
      time to time or any successor provision, or within the meaning of 29
      C.F.R. Section 2510.3-101(e) as an investment company registered under the
      Investment Company Act of 1940.

            


    

    


    
      	
               
      

            	
              (iii)

            	
              BORROWER SHALL INDEMNIFY LENDER
      AND DEFEND AND HOLD LENDER HARMLESS FROM AND AGAINST ALL CIVIL PENALTIES,
      EXCISE TAXES, OR OTHER LOSS, COST, DAMAGE AND EXPENSE (INCLUDING, WITHOUT
      LIMITATION, REASONABLE ATTORNEYS’ FEES AND COSTS INCURRED IN THE
      INVESTIGATION, DEFENSE AND SETTLEMENT OF CLAIMS AND LOSSES INCURRED IN
      CORRECTING ANY PROHIBITED TRANSACTION OR IN THE SALE OF A PROHIBITED LOAN,
      AND IN OBTAINING ANY INDIVIDUAL PROHIBITED TRANSACTION EXEMPTION UNDER
      ERISA THAT MAY BE REQUIRED, IN LENDER’S SOLE DISCRETION) THAT LENDER MAY
      INCUR, DIRECTLY OR INDIRECTLY, AS A RESULT OF DEFAULT UNDER THIS SECTION
      48.  THIS INDEMNITY SHALL SURVIVE ANY TERMINATION, SATISFACTION
      OR FORECLOSURE OF THIS
INSTRUMENT.

            


    

    


    49.           COOPERATION WITH RATING AGENCIES AND
INVESTORS.  Borrower covenants and agrees that in the event
Lender decides to include the Loan as an asset of a Secondary
Market Transaction, Borrower shall (a) at Lender’s request, meet with
representatives of the Rating Agencies and/or investors to discuss the business
and operations of the Mortgaged Property, and (b) permit Lender or its
representatives to provide related information to the Rating Agencies and/or
investors, and (c) cooperate with the reasonable requests of the Rating
Agencies and/or investors in connection with all of the foregoing.

    


    50.           RESERVED.

    


    51.           RESERVED.

    


    52.           RESERVED.

    


    53.           RESERVED.

    


    
      
        
        

      

      
        
          
 PAGE 62

        
        

      

      
        
        

      

    

     

    54.           RESERVED.

    


    55.           RESERVED.

    


    56.           RESERVED.

    


    57.           RESERVED.

    


    58.           RESERVED.

    


    59.           RESERVED.

    


    60.           ACCELERATION;
REMEDIES.  At any time
during the existence of an Event of Default, Lender, at Lender's option, may
declare the Indebtedness to be immediately due and payable without further
demand, and may institute an action of mortgage foreclosure pursuant to
applicable law and proceed to final judgment and execution thereon for the
amount of the Indebtedness (as of the date of such judgment) and may invoke any
other remedies permitted by applicable law or provided in this Instrument or in
any other Loan Document.  Lender shall be entitled to collect all
costs and expenses incurred in pursuing such remedies, including Attorneys' Fees
and Costs, costs of documentary evidence, abstracts and title reports and all
other expenses described in the Section of the Note titled “Costs and
Expenses”.  If Lender is the purchaser at the foreclosure sale of the
Mortgaged Property, the foreclosure sale price (Lender’s final bid) shall be
applied against the Indebtedness.

    


    61.           PREPARATION
AND FILING OF FINANCING STATEMENTS.  Borrower
authorizes Lender to prepare, execute and file, on Borrower’s behalf and without
Borrower’s signature, all financing statements and continuation statements under
the Uniform Commercial Code necessary or appropriate to give notice of, or to
perfect, Lender’s security interest in UCC Collateral.

    


    62.           RELEASE.  Upon payment of
the Indebtedness, Lender shall release this Instrument.  Borrower
shall pay Lender's reasonable costs incurred in releasing this
Instrument.

     

    63.           WAIVER OF
VALUATION AND APPRAISEMENT.  Borrower waives
all right of valuation and appraisement.

    


    64.           INDIANA
RESPONSIBLE PROPERTY TRANSFER LAW.  The Mortgaged
Property does not constitute "property" within the meaning of the Indiana
Responsible Property Transfer Law, IC 13-11-2-174.

    


    65.           MODIFICATIONS
TO SECTIONS 3 AND 4.  Sections 3(e) and
4(c) of this Instrument are modified to read as follows:

    


    
      	
               
      

            	
              3(e)

            	
              If
      Lender enters the Mortgaged Property, Lender shall be liable to account
      only to Borrower and only for those Rents actually
      received.  Except to the extent of Lender's willful misconduct,
      Lender shall not be liable to Borrower, anyone claiming under or through
      Borrower or anyone having an interest in the Mortgaged Property, by reason
      of any act or omission of Lender under


            


    

     

    
      
        
        

      

      
        
          
 PAGE 63

        
        

      

      
        
        

      

    

    
      


      
        	
                 
      

              	
                 

              	
                Section 3(d),
      and Borrower hereby releases and discharges Lender from any such liability
      to the fullest extent permitted by
law.

              


      

    

     

    
      	
               
      

            	
              4(c)

            	
              Borrower
      acknowledges and agrees that the exercise by Lender, either directly or by
      a receiver, of any of the rights conferred under this Section 4 shall
      not be construed to make Lender a mortgagee-in-possession of the Mortgaged
      Property so long as Lender has not itself entered into actual possession
      of the Land and the Improvements.  The acceptance by Lender of
      the assignment of the Leases pursuant to Section 4(a) shall not
      at any time or in any event obligate Lender to take any action under this
      Instrument or to expend any money or to incur any
      expenses.  Except to the extent of Lender's willful misconduct,
      Lender shall not be liable in any way for any injury or damage to person
      or property sustained by any person or persons, firm or corporation in or
      about the Mortgaged Property.  Prior to Lender's actual entry
      into and taking possession of the Mortgaged Property, Lender shall not
      (i) be obligated to perform any of the terms, covenants and
      conditions contained in any Lease (or otherwise have any obligation with
      respect to any Lease); (ii) be obligated to appear in or defend any
      action or proceeding relating to the Lease or the Mortgaged Property; or
      (iii) be responsible for the operation, control, care, management or
      repair of the Mortgaged Property or any portion of the Mortgaged
      Property.  The execution of this Instrument by Borrower shall
      constitute conclusive evidence that all responsibility for the operation,
      control, care, management and repair of the Mortgaged Property is and
      shall be that of Borrower, prior to such actual entry and taking of
      possession.

            


    

    


    66.           WAIVER OF TRIAL BY
JURY.  BORROWER AND LENDER EACH (A) COVENANTS AND AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS INSTRUMENT
OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE
OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO
SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE
FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY
EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL
COUNSEL.

    
       

      ATTACHED
EXHIBITS.  The following Exhibits are attached to this
Instrument:

      


      
        	
                 
      

              	
                |X|

              	
                Exhibit
      A

              	
                Description
      of the Land (required).

              


      

      


      
        	
                 
      

              	
                |X|

              	
                Exhibit
      B

              	
                Modifications
      to Instrument

              


      

       

    

    
 

    
      
        
        

      

      
        
          
 PAGE 64

        
        

      

      
        
        

      

    


    


    IN WITNESS WHEREOF, Borrower
has signed and delivered this Instrument or has caused this Instrument to be
signed and delivered by its duly authorized representative.

     

    
      
         

        
          
            
              	
                       
      

                    	
                      NLP CASTLE CREEK, LLC, a
      Delaware limited

                          liability
      company

                    


            

             

            
              	 	By:	
                      NTS
      Realty Holdings Limited Partnership, a

                      Delaware
      limited partnership, its sole
member

                    


            

             

            
              	 	By:	
                      NTS
      Realty Capital, Inc., a Delaware

                      corporation,
      its managing general

                      partner

                    


            

             

            
              	 	By:	
                       /s/
      Neil A. Mitchell   

                      Name: Neil A. Mitchell

                      Title: Sr Vice Pres

                    


            

             

            
 

          

        

        STATE
OF     Kentucky     ,      
Jefferson       County,
ss:

      

      


      On
this  7th  day
of  December ,
2009, before me, the undersigned, a Notary Public in and for said County,
personally appeared  Neil A.
Mitchell ,  Sr.
Vice Pres of NTS Realty Capital, Inc., a Delaware corporation, the
managing general partner of NTS Realty Holdings Limited Partnership, a Delaware
limited partnership, the sole member of NLP Castle Creek, LLC, a Delaware
limited liability company and acknowledged the execution of the foregoing
instrument.

       

      WITNESS
my hand and official seal.

       

      My
Commission expires:   April 27, 2010

      

                   
/s/ Susan M. Howard     

                             Notary
Public

      

    

    


    


    Prepared
by, and after recording return to:

    


    Michael
Van Voorhis, Esquire

    Troutman
Sanders LLP

    P.O. Box
1122

    Richmond,
Virginia  23218-1122

    



    
      
         


      

      
        
          
 PAGE 65

        
        

      

      
         


      

    


    EXHIBIT
A

    


    Legal
Description

     

    
      Castle
Creek Apartments

      


      


      A part of
the Southeast Quarter of Section 16, Township 17 North, Range 4 East, in Marion
County, Indiana, more particularly described as follows:

      


      Commencing
at the Southeast Corner of the aforementioned Quarter Section; running thence
North 00 degrees 13 minutes 38 seconds East along the East line thereof, a
distance of 1646.368 feet to the Point of Beginning of the real estate described
herein; continuing thence along the same line a distance of 1000.00 feet to the
Northeast Corner thereof; running thence South 89 degrees 59 minutes 06 seconds
West along the North line thereof a distance of 473.854 feet to a point on the
centerline of Allisonville Road, said point being on a curve concave Southeast
having a radius of 14,317.17 feet; running thence Southeasterly along said
centerline curve an arc distance of 818.499 feet to the point of tangency of
said curve, said arc being subtended by a long chord having a bearing of South
23 degrees 05 minutes 45 seconds West and a length of 818.382 feet; running
thence South 21 degrees 27 minutes 29 seconds West tangent to the last described
curve a distance of 274.992 feet; running thence North 89 degrees 25 minutes 53
seconds East parallel to the South line thereof, a distance of 891.558 feet to
the Point of Beginning.

      


      Except
that part conveyed to the Consolidated City of Indianapolis by a Deed recorded
May 21, 1986 as Instrument No. 86-42824 in the Office of the Recorder of Marion
County, Indiana, described as follows:

      


      A part of
the Southeast Quarter of Section 16, Township 17 North, Range 4 (9 by Deed)
East, Marion County, Indiana, described as follows:

      


      Commencing
at the Southeast Corner of said Section; thence North 0 degrees 11 minutes 58
seconds East (assumed bearing) 2600.42 feet along the East line of said Section
to the Point of Beginning of this description; thence South 89 degrees 57
minutes 36 seconds West 25.18 feet; thence South 89 degrees 59 minutes 48
seconds West 375.00 feet; thence South 50 degrees 53 minutes 29 seconds West
31.74 feet; thence South 24 degrees 22 minutes 02 seconds West 99.48 feet;
thence South 32 degrees 32 minutes 16 seconds West 100.65 feet; thence South 21
degrees 31 minutes 43 seconds West 398.30 feet; thence South 14 degrees 22
minutes 59 seconds West 75.27 feet; thence South 26 degrees 39 minutes 01
seconds West 225.37 feet; thence South 18 degrees 36 minutes 38 seconds West
124.19 feet to the South line of the Owner's land; thence South 89 degrees 31
minutes 03 seconds West 22.86 feet along said South line to the Eastern boundary
of Allisonville Road; thence North 21 degrees 28 minutes 23 seconds East 259.03
feet along said Eastern boundary; thence Northeasterly 816.332 feet along an arc
to the right and having a radius of 14,278.94 feet and subtended by a long chord
having a bearing of North 23 degrees 06 minutes 40 seconds East and a length of
816.21 feet along the Southeastern boundary of Allisonville Road to the South
boundary of East 91st Street; thence South 89 degrees 59 minutes 48 seconds East
433.35 feet along said South boundary to the East line of said Section;
thence
South 0 degrees 11 minutes 58 seconds West 33.48 feet along said East line to
the Point of Beginning.


      
        
           


        

        
          
            
 PAGE A-1

          
          

        

        
           


        

      



    EXHIBIT
B

    


    MODIFICATIONS
TO INSTRUMENT

    


    The
following modifications are made to the text of the Instrument that precedes
this Exhibit:

    


    


    I.           TRANSACTION
SPECIFIC MODIFICATIONS.

    


    
      	
              1.

            	
              The
      definition of “Loan Documents” in Section 1 must be modified as
      follows:

            


    

     

    “Loan Documents” means the
Note, this Instrument, the Assignment of Management Agreement, the Master
Cross-Collateralization Agreement, all guaranties, all indemnity
agreements, all Collateral Agreements, O&M Programs, the MMP and any other
documents now or in the future executed by Borrower, any guarantor or any other
Person in connection with the Loan evidenced by the Note, as such documents may
be amended from time to time.  As more fully set forth in
Section 69 below, this Instrument secures all of Borrower’s obligations under
the Master Cross-Collateralization Agreement, including Borrower’s obligation to
pay the “Total Indebtedness.” However, the Master Cross-Collateralization
Agreement will not be considered a Loan Document for the purpose of establishing
the Indebtedness as defined in this Instrument and in the Note.  The
definition of Total Indebtedness under the Master Cross-Collateralization
Agreement includes the Indebtedness under this Instrument.  However,
the definition of Indebtedness under this Instrument does not include that
portion of the Total Indebtedness for which Borrower would not be liable if the
Master Cross-Collateralization Agreement was not in effect.

     

    
      	
              2.

            	
              The
      following definition must be inserted in Section
  1:

            


    

     

    
      	 	
              (vvvv)

            	
              “Master Cross-Collateralization
      Agreement” means the Master Cross-Collateralization Agreement of
      even date herewith by and among Borrower, Lender and the other parties
      named therein.

            


    

     

    
      	
              3

            	
              The
      fourth sentence of Section 7(b) is deleted and replaced with the
      following:

            


    

    


    Lender
shall hold the Imposition Deposits in an interest bearing account.  Any
interest earned on such moneys shall be added to the Imposition
Deposits and disbursed in accordance with the terms and provisions of this
Instrument.  Lender shall not be responsible for any losses resulting from
investment of the Imposition Deposits or for obtaining any specific level or
percentage of earnings on such Imposition Deposits.

    


    
      	
              4.

            	
              The
      first paragraph of Section 44 is modified as
  follows:

            


    

     

    This
Section 44 shall apply in the event the Note is assigned to a REMIC trust prior
to the Cut-off Date, and, subject to Section 44(a) and (c) below, Borrower shall
have the right either (x) to defease the Loan in whole and obtain the release of
the Mortgaged Property from the lien of this Instrument, or (y) to defease the
Loan in part as set forth in Section 68 (“Defeasance”), upon the
satisfaction of the following conditions:

     

    
      
         


      

      
        
          
 PAGE B-1

        
        

      

      
         


      

    


    5.           Section
44(f)(viii) is modified as follows:

     

    
      	
               
      

            	
              (viii)

            	
              unless
      waived by Lender, a written certificate from an independent certified
      public accounting firm (reasonably acceptable to Lender), confirming that
      the Defeasance Collateral will (A) in the event of a Defeasance of the
      entire Loan, generate cash sufficient to make all Scheduled Debt Payments
      as they fall due under the Note, including full payment due on the Note on
      the Maturity Date, or (B) in the event of a partial Defeasance, generate
      cash sufficient to make all Scheduled Debt Payments as they fall due under
      the Defeased Note, including full payment on the Defeased Note on the
      Maturity Date;

            


    

     

    
      	
              6.

            	
              Section
      44(f)(x) is modified as follows:

            


    

     

    
      	
               
      

            	
              (x)

            	
              Lender’s
      form of a transfer and assumption agreement (“Transfer and Assumption
      Agreement”), whereupon Borrower and any guarantor (in each case,
      subject to satisfaction of all requirements hereunder) shall be relieved
      or, in the case of a partial Defeasance, partially relieved from liability
      in connection with the Loan (other than, in the event of a Defeasance of
      the entire Loan, any liability under Section 18 of this Instrument for
      events that occur prior to the Defeasance Closing Date, whether discovered
      before or after the Defeasance Closing Date) and Successor Borrower shall
      assume all remaining obligations;

            


    

     

    
      	
              7.

            	
              Section
      44(f)(xi) is modified as follows:

            


    

     

    
      	
               
      

            	
              (xi)

            	
              In
      the event of a Defeasance of the entire Loan, forms of all documents
      necessary to release the Mortgaged Property from the liens created by this
      Instrument and related UCC financing statements (collectively, “Release Instruments”),
      each in appropriate form required by the state in which the Mortgaged
      Property is located; and

            


    

     

    
      	
              8.

            	
              Section
      44(g)(ii) is modified as follows:

            


    

     

    
      	
               
      

            	
              (ii)

            	
              The
      Defeasance Collateral must be in an amount to provide for (A) redemption
      payments to occur prior, but as close as possible, to all successive
      Installment Due Dates occurring under the Note or, in the event of a
      partial Defeasance, the Defeased Note, after the Defeasance Closing Date
      and (B) deliver redemption proceeds at least equal to (1) in the event of
      a Defeassance of the entire Loan, the amount of principal and interest due
      on the Note on each Installment Due Date including full payment due on the
      Note on the Maturity Date or (2) in the event of a partial Defeasance, the
      amount of principal and interest due on the Defeased Note on each
      Installment Due Date including full payment due on the Defeased Note on
      the Maturity Date (“Scheduled Debt
      Payments”).  The Defeasance Collateral shall be arranged
      such that redemption payments received from the Defeasance Collateral are
      paid directly to Lender to be applied on account of the Scheduled Debt
      Payments.  Unless otherwise agreed in writing by Lender, the
      pledge of the Defeasance Collateral shall be effectuated through the
      book-entry facilities of a qualified securities intermediary designated by
      Lender in conformity with all applicable laws;
  and

            


    

     


    
      
         


      

      
        
          
 PAGE B-2

        
        

      

      
         


      

    


    
      	
              9.

            	
              The
      following new Section 44(j) must be
inserted:

            


    

     

    
      	
               
      

            	
              (j)

            	
              With
      respect to any partial Defeasance, Borrower shall execute and deliver to
      Lender all documents necessary to amend and restate the Note with two
      substitute notes: one note having a principal balance equal to the
      defeased portion of the Loan (the “Defeased Note”) and one
      note having a principal balance equal to the undefeased portion of the
      Loan (the “Undefeased
      Note”).   The Undefeased Note may be the subject of
      a further Defeasance in accordance with the terms of this Section
      44.   The term “Note,” as used in this Section 44, refers
      to the Undefeased Note that is the subject of further
      Defeasance.

            


    

     

    
      	
              10.

            	
              The
      following new Section is added at the end of the Instrument after the last
      numbered Section, but there are no Sections between the last numbered
      Section and Section 68:

            


    

     

    68.           PARTIAL
DEFEASANCE.  The Loan is cross-collateralized with certain
other loans, subject to the terms of the Master Cross-Collateralization
Agreement.  The Master Cross-Collateralization Agreement provides
that, under certain circumstances, a borrower named therein may obtain the
release of the mortgage securing a particular loan, subject to (i) the
prepayment or defeasance, as applicable, of the amount of the outstanding
indebtedness under such loan, and (ii) on a pro-rata basis, the prepayment or
defeasance, as applicable, of the indebtedness of the other loans remaining
outstanding under the Master Cross-Collateralization Agreement in the total
amount of the “Release Price” or “Defeasance Release Price” defined in the
Master Cross-Collateralization Agreement.  During the Defeasance
Period, Borrower will have the right to partially defease the Loan in the amount
of any part of a “Defeasance Release Price” allocated to the Loan subject to the
provisions of Section 44.

     

    11.           The
following new Sections are added to the Instrument:

    


    69.           CROSS
COLLATERALIZATION.  The Indebtedness and all other obligations
of Borrower under the Loan Documents (“Borrower Obligations”) are
also secured pursuant to the terms of that certain Master
Cross-Collateralization Agreement (“Master Cross-Collateralization
Agreement”) dated of even date herewith and executed by Lender and
Borrower and the other borrowers named therein (“Other
Borrowers”).  Borrower hereby irrevocably mortgages, grants,
conveys and assigns to Lender the Mortgaged Property, to secure to Lender
payment of the Total Indebtedness (as defined in the Master
Cross-Collateralization Agreement) in an aggregate principal amount of
$156,295,000.00 (including the principal amount of the Indebtedness) and the
performance of the covenants and agreements contained in each of the Other
Borrowers’ Loan Documents (as defined in the Master Cross-Collateralization
Agreement), as well as to secure to Lender payment of the Indebtedness and
performance of the covenants and agreements contained in the Loan
Documents.

    


    70.           CROSS DEFAULT.  Any
Event of Default under this Instrument shall constitute an Event of Default
under the Master Cross-Collateralization Agreement and any Event of Default
under the Master Cross-Collateralization Agreement shall constitute an Event of
Default under this Instrument.


    
      
         


      

      
        
          
 PAGE B-3

        
        

      

      
         


      

    


    
      	
              12.

            	
              Section
      33 is deleted in its entirety and replaced with the
    following:

            


    

    


    
      	
               
      

            	
              (a)

            	
              Until
      the Indebtedness is paid in full, each Borrower and SPE Equity Owner [Note – all
      references to SPE Equity Owner are not applicable] shall remain a
      Single Purpose Entity.

            


    

    


    
      	
               
      

            	
              (b)

            	
              A
      “Single Purpose
      Entity” means a corporation, limited partnership, or limited
      liability company which, at all times since its formation and
      thereafter:

            


    

     

    
      	
               
      

            	
              (i)

            	
              shall
      not engage in any business or activity, other than the ownership,
      operation and maintenance of the Mortgaged Property and activities
      incidental thereto and
      those activities permitted under or necessary to comply with the Loan
      Documents and the Master Cross-Collateralization
      Agreement;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              shall
      not acquire, own, hold, lease, operate, manage, maintain, develop or
      improve any assets other than the Mortgaged Property and such Personalty
      as may be necessary for the operation of the Mortgaged Property and shall
      conduct and operate its business as presently conducted and
      operated;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              shall
      preserve its existence as an entity duly organized, validly existing and
      in good standing (if applicable) under the laws of the jurisdiction of its
      formation or organization and shall do all things necessary to observe
      organizational formalities;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              shall
      not merge or consolidate with any other
Person;

            


    

     

    
      	
               
      

            	
              (v)

            	
              except as otherwise permitted
      in the Loan Documents and to the fullest extent permitted by law,
      shall not take any action to dissolve, wind-up, terminate or liquidate in
      whole or in part; to sell, transfer or otherwise dispose of all or
      substantially all of its assets; to change its legal structure; transfer
      or permit the direct or indirect transfer of any partnership, membership
      or other equity interests, as applicable, other than Transfers permitted
      hereunder; issue additional partnership, membership or other equity
      interests, as applicable; or seek to accomplish any of the
      foregoing;

            


    

     

    
      	
               
      

            	
              (vi)

            	
              shall
      not, without the prior unanimous written consent of all of the Borrower’s
      partners, members, or shareholders, as applicable, and, if applicable, the
      prior unanimous written consent of one hundred percent (100%) of the
      members of the board of directors or of the board of managers of the
      Borrower or the SPE Equity Owner:  (A) file any insolvency, or
      reorganization case or proceeding, to institute proceedings to have the
      Borrower or any SPE Equity Owner be adjudicated bankrupt or insolvent, (B)
      institute proceedings under any applicable insolvency law, (C) seek any
      relief under any law relating to relief from debts or the protection of
      debtors, (D) consent to the filing or institution of bankruptcy or
      insolvency proceedings against the Borrower or any SPE Equity Owner, (E)
      file a petition seeking, or consent to, reorganization or relief with
      respect to the Borrower or any SPE Equity Owner under any applicable
      federal or state law relating to bankruptcy or insolvency, (F) seek or
      consent to the appointment of a receiver, liquidator, assignee,
      

            


    

     


    
      
         


      

      
        
          
 PAGE B-4

        
        

      

      
         


      

    


    
      	
               
      

            	
              trustee,
      sequestrator, custodian, or any similar official for the Borrower or a
      substantial part of its property or for any SPE Equity Owner or a
      substantial part of its property, (G) make any assignment for the benefit
      of creditors of the Borrower or any SPE Equity Owner, (H) admit in writing
      the Borrower’s or any SPE Equity Owner’s inability to pay its debts
      generally as they become due, or (I) take action in furtherance of any of
      the foregoing;

            


    

     

    
      	
               
      

            	
              (vii)

            	
              shall
      not amend or restate its organizational documents if such change would
      modify the requirements set forth in this Section
  33;

            


    

     

    
      	
               
      

            	
              (viii)

            	
              shall
      not own any subsidiary or make any investment in, any other
      Person;

            


    

     

    
      	
               
      

            	
              (ix)

            	
              except as set forth in the Loan
      Documents and the Master Cross-Collateralization Agreement shall
      not commingle its assets with the assets of any other Person and shall
      hold all of its assets in its own
name;

            


    

     

    
      	
               
      

            	
              (x)

            	
              shall
      not incur any debt, secured or unsecured, direct or contingent (including,
      without limitation, guaranteeing any obligation), other than, (A) the
      Indebtedness (and any further indebtedness as described in Section 43 with
      regard to Supplemental Mortgages) and the Total Indebtedness
      under the Master Cross-Collateralization Agreement and (B)
      customary unsecured trade payables incurred in the ordinary course of
      owning and operating the Mortgaged Property provided the same are not
      evidenced by a promissory note, do not exceed, in the aggregate, at any
      time a maximum amount of three percent (3%) of
      the original principal amount of the Indebtedness and are paid within
      sixty (60) days of the date
incurred;

            


    

     

    
      	
               
      

            	
              (xi)

            	
              except as set forth in the Loan
      Documents and the Master Cross-Collateralization Agreement, shall
      maintain its records, books of account, bank accounts, financial
      statements, accounting records and other entity documents separate and
      apart from those of any other Person and shall not list its assets as
      assets on the financial statement of any other Person; provided, however,
      that the Borrower’s assets may be included in a consolidated financial
      statement of its Affiliate provided that (A) appropriate notation shall be
      made on such consolidated financial statements to indicate the
      separateness of the Borrower from such Affiliate and to indicate that the
      Borrower’s assets and credit are not available to satisfy the debts and
      other obligations of such Affiliate or any other Person and (B) such
      assets shall also be listed on the Borrower’s own separate balance
      sheet;

            


    

     

    
      	
               
      

            	
              (xii)

            	
              except for capital
      contributions or capital distributions permitted under the terms and
      conditions of its organizational documents, shall only enter into any
      contract or agreement with any general partner, member, shareholder,
      principal or Affiliate of Borrower or any guarantor, or any general
      partner, member, principal or Affiliate thereof, upon terms and conditions
      that are commercially reasonable and substantially similar to those that
      would be available on an arm’s-length basis with third
      parties;

            


    

     


    
      
         


      

      
        
          
 PAGE B-5

        
        

      

      
         


      

    

     

    
      	
               
      

            	
              (xiii)

            	
              except as set forth in the Loan
      Documents and the Master Cross-Collateralization Agreement, shall
      not maintain its assets in such a manner that will be costly or difficult
      to segregate, ascertain or identify its individual assets from those of
      any other Person;

            


    

     

    
      	
               
      

            	
              (xiv)

            	
              except pursuant to the Master
      Cross-Collateralization Agreement, shall not assume or guaranty
      (excluding any guaranty that has been executed and delivered in connection
      with the Note) the debts or obligations of any other Person, hold itself
      out to be responsible for the debts of another Person, pledge its assets
      to secure the obligations of any other Person or otherwise pledge its
      assets for the benefit of any other Person, or hold out its credit as
      being available to satisfy the obligations of any other
      Person;

            


    

     

    
      	
               
      

            	
              (xv)

            	
              shall
      not make or permit to remain outstanding any loans or advances to any
      other Person except for those investments permitted under the Loan
      Documents and shall not buy or hold evidence of indebtedness issued by any
      other Person (other than cash or investment-grade
    securities);

            


    

     

    
      	
               
      

            	
              (xvi)

            	
              shall
      file its own tax returns separate from those of any other Person, except
      to the extent that the Borrower is treated as a “disregarded entity” for
      tax purposes and is not required to file tax returns under applicable law,
      and shall pay any taxes required to be paid under applicable
      law;

            


    

     

    
      
        	
                 
      

              	
                (xvii)

              	
                      
                  shall
      hold itself out to the public as a legal entity separate and distinct from
      any other Person and conduct its business solely in its own name, shall
      correct any known misunderstanding regarding its separate identity and
      shall not identify itself or any of its Affiliates as a division or
      department of any other Person; provided that Borrower may
      appear on consolidated financial statements with segmented reporting for
      NTS
Holdings.

                

              


      

    

     

    
      
        	
                 
      

              	
                (xviii)

              	
                      
                  shall
      maintain adequate capital for the normal obligations reasonably
      foreseeable in a business of its size and character and in light of its
      contemplated business operations and shall pay its debts and liabilities
      from its own assets as the same shall become
    due;

                

              


      

    

     

    
      	
               
      

            	
              (xix)

            	
              shall
      allocate fairly and reasonably shared expenses with Affiliates (including,
      without limitation, shared office
space);

            


    

     

    
      	
               
      

            	
              (xx)

            	
              except pursuant to the Loan
      Documents and Master Cross-Collateralization Agreement shall pay
      (or cause the Property Manager to pay on behalf of the Borrower from the
      Borrower’s funds) its own liabilities (including, without limitation,
      salaries of its own employees) from its own
  funds;

            


    

     

    
      	
               
      

            	
              (xxi)

            	
              shall
      not acquire obligations or securities of its partners, members,
      shareholders, or Affiliates, as
applicable;

            


    

    
       

      
        	
                 
      

              	
                (xxii)

              	
                except
      as contemplated or permitted by the property management agreement with
      respect to the Property Manager, shall not permit any Affiliate or
      constituent party independent access to its bank accounts,

              


      

    

     

    
      
         


      

      
        
          
 PAGE B-6

        
        

      

      
         


      

    

    
      

        
          	
                   
      

                	
                   

                	
                  except pursuant to and in
      connection with the Loan Documents and Master Cross-Collateralization
      Agreement;

                


        

      

    

     

    
      	
               
      

            	
              (xxiii)

            	
              shall
      maintain, or require the
      property manager to maintain, a sufficient number of employees (if
      any) in light of its contemplated business operations and pay the salaries
      of its own employees, if any, only from its own
  funds;

            


    

     

    
      	
               
      

            	
              (xxiv)

            	
              if
      such entity is a single member limited liability company, such entity
      shall (A) be formed and organized under Delaware law, (B) have either (1)
      one springing member that is a corporation whose stock is 100% owned by
      the sole member of Borrower and that satisfies the requirements for a
      corporate springing member set forth below in this subsection or (2) two
      springing members who are natural persons and (C) otherwise comply with
      all Rating Agencies criteria for single member limited liability companies
      (including, without limitation, the delivery of Delaware single member
      limited liability company opinions acceptable in all respects to Lender
      and to the Rating Agencies).  If the springing member is a
      corporation, such springing member shall at all times comply, and will
      cause Borrower to comply, with each of the representations, warranties and
      covenants contained in this Section 33 as if such representation, warranty
      or covenant were made directly by such corporation.  If there is
      more than one springing member, only one springing member shall be the
      sole member of Borrower at any one time, and the second springing member
      shall become the sole member only upon the first springing member ceasing
      to be a member, so that at all times Borrower has one and only one
      member;

            


    

     

    
      	
               
      

            	
              (xxv)

            	
              if
      such entity is a single member limited liability company that is
      board-managed, such entity shall have a board of managers separate from
      that of guarantor and any other Person and shall cause its board of
      managers to keep minutes of board meetings and actions and observe all
      other Delaware limited liability company required formalities;
      and

            


    

     

    
      	
               
      

            	
              (xxvi)

            	
              if
      a SPE Equity Owner is required pursuant to Section 1(jjjj) of this
      Instrument, if the Borrower is (A) a limited liability company with more
      than one member, then the Borrower has and shall have at least one (1)
      member that is an SPE Equity Owner that has satisfied and shall satisfy
      the requirements of Section 33(c) below and such member is its managing
      member, or (B) a limited partnership, then all of its general partners are
      SPE Equity Owners that have satisfied and shall satisfy the requirements
      of Section 33(c) below.

            


    

     

    
      	
               
      

            	
              (c)

            	
              With
      respect to each SPE Equity Owner, if applicable, a “Single Purpose Entity”
      means a corporation or a Delaware single member limited liability company
      which, at all times since its formation and thereafter complies in its own
      right (subject to the modifications set forth below), and shall cause
      Borrower to comply, with each of the requirements contained in Section
      33(b).  Upon the withdrawal or the disassociation of an SPE
      Equity Owner from Borrower, Borrower shall immediately appoint a new SPE
      Equity Owner, whose organizational documents are substantially similar to
      those of the withdrawn or disassociated SPE Equity Owner, and deliver a
      new nonconsolidation opinion to 

            


    

     


    
      
         


      

      
        
          
 PAGE B-7

        
        

      

      
         


      

    


    
      	
               
      

            	
              the
      Rating Agencies and Lender in form and substance satisfactory to Lender
      and to the Rating Agencies (unless the opinion is waived by the Rating
      Agencies), with regard to nonconsolidation by a bankruptcy court of the
      assets of each of the Borrower and SPE Equity Owner with those of its
      Affiliates.

            


    

     

    
      	
               
      

            	
              (i)

            	
              With
      respect to Sections 33(b)(i) and 33(b)(x) the SPE Equity Owner shall not
      engage in any business or activity other than being the sole managing
      member or general partner, as the case may be, of the Borrower and owning
      at least a 0.5% equity interest in
Borrower;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              With
      respect to Section 33(b)(ii), the SPE Equity Owner has not and shall not
      acquire or own any assets other than its equity interest in the Borrower
      and personal property related thereto;
and

            


    

     

    
      	
               
      

            	
              (iii)

            	
              With
      respect to Section 33(b)(viii), the SPE Equity Owner shall not own any
      subsidiary or make any investment in any other Person, except for
      Borrower;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              With
      respect to Section 33(b)(xiv), the SPE Equity Owner shall not assume or
      guaranty the debts or obligations of any other Person, hold itself out to
      be responsible for the debts of another Person, pledge its assets to
      secure the obligations of any other Person or otherwise pledge its assets
      for the benefit of any other Person, or hold out its credit as being
      available to satisfy the obligations of any other Person, except for in
      its capacity as general partner of the Borrower (if
      applicable);

            


    

     

    
      	
               
      

            	
              (v)

            	
              With
      respect to Section 33(b)(x), the SPE Equity Owner has not and shall not
      incur any debt, secured or unsecured, direct or contingent (including,
      without limitation, guaranteeing any obligation), other than (A) customary
      unsecured payables incurred in the ordinary course of owning the Borrower
      provided the same are not evidenced by a promissory note, do not exceed,
      in the aggregate, at any time a maximum amount of $10,000 and are paid
      within sixty (60) days of the date incurred and (B) except in its capacity
      as general partner of the Borrower (if
  applicable).

            


    

     

    
      	
               
      

            	
              (d)

            	
              Notwithstanding
      anything to the contrary in this Instrument, no Transfer will be permitted
      under Sections 21(c), (d), (e) or (f) unless the provisions of this
      Section 33 are satisfied at all times, and any such Transfer shall
      be limited by the fact that the Indebtedness may not be assumed by any
      third party while the Master Cross-Collateralization Agreement remains in
      effect.

            


    

     

    
      	
              13.

            	
              Section
      11(b) is deleted in its entirety and replaced with the
      following:

            


    

    


    
      	
               
      

            	
              “(b)

            	
              convert
      any individual units currently used for residential purposes or common
      areas to commercial use,”

            


    

    


    14.           Section
14 is modified as follows:

     

    
           In Section
14(c), “ninety (90) days” is replaced with “one hundred twenty (120)
days”.

       

      In
Section 14(d), revise subsections (i) and (ii) to read as
follows:

    

     

    
      
         


      

      
        
          
 PAGE B-8

        
        

      

      
         


      

    

     

    
      	
               
      

            	
              (i)

            	
              prior
      to a Securitization, and thereafter
      upon Lender’s reasonable request, a monthly Rent Schedule and a
      monthly statement of income and expenses for Borrower’s operation of the
      Mortgaged Property; following a
      Securitization, upon Lender’s reasonable request but not more frequently
      than quarterly, a Rent Schedule and a statement of income and expenses for
      Borrower’s operation of the Mortgaged
  Property;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              prior
      to a Securitization, and thereafter upon Lender’s reasonable request (provided that
      following a Securitization Lender will not make such a request more
      frequently than quarterly}, Borrower shall furnish to Lender a
      statement that identifies all owners of any interest in Borrower and any
      Controlling Entity and the interest held by each (unless Borrower or any
      Controlling Entity is a publicly-traded entity in which case such
      statement of ownership shall not be required), and if Borrower or a
      Controlling Entity is a corporation, all officers and directors of
      Borrower and the Controlling Entity, and if Borrower or a Controlling
      Entity is a limited liability company, all Managers who are not
      members;

            


    

     

    In
Section 14(g), the second sentence is deleted and replaced with the
following:

     

    If
Borrower has not provided the required statements, schedules and reports within
10 Business Days following such Notice (15 Business Days for any
statements, schedules and reports required pursuant to Sections 14(b)(i), (ii),
or (iii)), then Lender shall have the right to have Borrower’s books and
records audited, at Borrower’s expense, by independent certified public
accountants selected by Lender in order to obtain such statements, schedules and
reports, and all related costs and expenses of Lender shall become immediately
due and payable and shall become an additional part of the Indebtedness as
provided in Section 12.

     

    In
Section 14(h), “ninety (90) days” is replaced each time that it appears, with
“one hundred twenty (120) days”.

     

    15.           Section
21(b) is revised to include a new clause (iv) as follows:

    


    
      	
               
      

            	
              “(iv)

            	
              a
      sale or transfer of limited partnership interests in NTS Realty Holdings
      Limited Partnership (“NTS Holdings”), so long as the Controlling Interest
      in the managing general partner of NTS Holdings continues to be held by
      J.D. Nichols
      and/or Brian F. Lavin.”

            


    

    


    
      	
              16.

            	
              The
      introductory provision of Section 21(c)(vii) is revised to read as
      follows:

            


    

     

    
      	 	
              “(vii)

            	
              without
      limiting the provisions of Section 21(b)(iv), any
      Transfer of an interest in Borrower or any
      interest in a Controlling Entity (which, if such Controlling Entity
      were Borrower, would result in an Event of Default) listed in (A)
      through (G) below (a "Preapproved Transfer"),
      under the terms and conditions listed as items (1) through (7)
      below:”

            


    

     

    
      	
              17.

            	
              Section
      21(c)(vii)(G) is added as
follows:

            


    


    
      	 	
              “(G)

            	
              a
      sale or transfer to employees of NTS Development Company or NTS Realty
      Capital, Inc., or to an entity in which NTS Holdings holds the Controlling
      Interest owned and controlled by the transferor or the transferor’s
      immediate family members; or”

            


    


    
      
         


      

      
        
          
 PAGE B-9

        
        

      

      
         


      

    

    


    
      	
              18.

            	
              Section
      21(c)(vii)(2) is revised to read as
follows:

            


    

    


    
      	
               
      

            	
              “(2)

            	
              For the purposes of
      these Preapproved Transfers, a transferor's immediate family members will
      be deemed to include a spouse, parent, child (including
      by adoption) or grandchild
      (including
      by adoption) of such
      transferor.”

            


    

    


    
      	
              19.

            	
              Section
      21(c)(vii)(3) is completed as
follows:

            


    

    


    
      	
               
      

            	
              “(3)    Either
      directly or indirectly, J.D. Nichols and/or Brian F. Lavin shall retain at
      all times a managing interest in the Borrower.”

            


    

    


    


    
      	
              II.

            	
              EXTRA
      LARGE LOAN MODIFICATIONS.

            


    

    


    
      	
              1.

            	
              Section
      1 of this Instrument is modified as
follows:

            


    

    


    The
definition of Collateral Agreement is deleted and replaced with the
following:

     

    “Collateral Agreement” means
any separate agreement between Borrower and Lender for the purpose of
establishing replacement reserves for the Mortgaged Property, establishing a
fund to assure the completion of repairs or improvements specified in that
agreement, or assuring reduction of the outstanding principal balance of the
Indebtedness if the occupancy of or income from the Mortgaged Property does not
increase to a level specified in that agreement, or any other agreement or
agreements between Borrower and Lender which provide for the establishment of
any other fund, reserve or account, including, without limitation, the Clearing
Account Agreement and the Cash Management Agreement.

     

    2.           The
following definitions shall be added to Section 1 of this
Instrument:

     

    “Cash Management Agreement”
shall mean that certain cash management agreement of even date herewith among
Borrower, Lender and Property Manager.

     

    “Clearing Account
Agreement-CME” shall mean that certain clearing account agreement of even
date herewith among Borrower, Lender and Clearing Bank.

     

    “Clearing Bank” shall be
defined in the Clearing Account Agreement.

     

    
      	
              3.

            	
              The
      first sentence in Section 19(c) of this Instrument is deleted and replaced
      with the following:

            


    

     

    Borrower
will maintain the insurance coverage described in this Section 19 with companies
acceptable to Lender and with a claims paying ability of a minimum of any of the
following (i) “A-” or its equivalent by Fitch, Inc., (ii) “A-” or its equivalent
by Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. or (iii) “A3” or its equivalent by Moody’s Investors Service,
Inc.  All insurers providing insurance
required by this Instrument must be authorized to issue insurance in the
Property Jurisdiction.

     

    4.           The
following Section 45 is added as follows:

     


    
      
         


      

      
        
          
 PAGE B-10

        
        

      

      
         


      

    


     

    
      	
               
      

            	
              45.

            	
              SPLITTING THE
      NOTE.  Lender has the right from time to time to sever
      the Note into one or more separate promissory notes in such denominations
      as Lender determines in its sole discretion, which promissory notes may be
      included in separate sales or Securitizations undertaken by
      Lender.  In conjunction with any such action, Lender may
      redefine the interest rate and amortization schedule; provided however:
      (a) if Lender redefines the interest rate, the weighted average of the
      interest rates contained in the severed promissory notes taken in the
      aggregate shall equal the Fixed Interest Rate (as defined in the Note),
      and (b) if Lender redefines the amortization schedule, the amortization of
      the severed promissory notes taken in the aggregate shall require no more
      amortization to be paid under the Loan than as required under this
      Instrument and the Note at the time such action was taken by Lender and
      such redefined amortization shall not result in a change in the amount of
      the monthly payment due under the Note.  The Borrower shall only
      be required to make one payment under such separate promissory
      notes.  Subject to the foregoing, each severed promissory note,
      and the Loan evidenced thereby, shall be upon all of the terms and
      provisions contained in this Instrument and the Loan Documents which
      continue in full force and effect, except that Lender may allocate
      specific collateral given for the Loan as security for performance of
      specific promissory notes, in each case with or without cross default
      provisions.  Borrower, at Borrower's expense, agrees to
      cooperate with all reasonable requests of Lender to accomplish the
      foregoing, including, without limitation, execution and prompt delivery to
      Lender of a severance agreement and such other documents as Lender shall
      reasonable require.  Borrower hereby appoints Lender its
      attorney-in-fact with full power of substitution (and which shall be
      deemed to be coupled with an interest and irrevocable until the Loan is
      paid and this Instrument is discharged of record, with Borrower hereby
      ratifying all that its said attorney shall do by virtue thereof) to make
      and execute all documents necessary or desirable to effect the aforesaid
      severance; provided however, Lender shall not make or execute any such
      documents under such power until ten (10) Business Days after written
      Notice has been given to Borrower by Lender of Lender's intent to exercise
      its rights under such power.  Borrower's failure to deliver any
      of the documents requested by Lender hereunder for a period of ten (10)
      Business Days after such Notice by Lender shall, at lender's option,
      constitute an Event of Default
hereunder.

            


    

     

    5.           Section
49 of this Instrument is deleted and replaced with the following:

     

    
      	
               
      

            	
              49.

            	
              SALE OF NOTE AND
      SECURITIZATION.  At the request of the Lender and, to the
      extent not already required to be provided by Borrower under this
      Instrument, Borrower shall use reasonable efforts to satisfy the market
      standards to which the Lender customarily adheres or which may be
      reasonably required in the marketplace or by the Rating Agencies in
      connection with any Secondary Market Transaction of rated single or
      multi-class securities (the “Securities”) secured by
      or evidencing ownership interests in the Note and this Instrument,
      including, without limitation, to:

            


    

    

      
        	
                 
      

              	
                (a)

              	
                (i)
      provide such financial and other information with respect to the Mortgaged
      Property, the Borrower and the Property Manager, (ii) perform or
      permit or cause to be performed or permitted such site inspection,
      appraisals, market studies, environmental reviews and reports
      (Phase I’s and, if appropriate, Phase II’s), engineering reports and
      other due diligence investigations of the Mortgaged Property, as may be
      reasonably

              


      

    


    
      
         


      

      
        
          
 PAGE B-11

        
        

      

      
         


      

    

     

    

      
        	
                 
      

              	
                 

              	
                requested
      by the Lender or the Rating Agencies or as may be necessary or appropriate
      in connection with the Secondary Market Transaction, and (iii) make
      such representations and warranties as of the closing date of the
      Secondary Market Transaction with respect to the Mortgaged Property,
      Borrower and the Loan Documents as are customarily provided in
      securitization transactions and as may be reasonably requested by the
      Lender or by the Rating Agencies and consistent with the facts covered by
      such representations and warranties as they exist on the date thereof,
      including the representations and warranties made in the Loan Documents
      (collectively, the “Provided Information”),
      together, if customary, with appropriate verification and/or consents of
      the Provided Information through letters of auditors or opinions of
      counsel of independent attorneys acceptable to the Lender and to the
      Rating Agencies;

              


      

    

    


    
      	
               
      

            	
              (b)

            	
              at
      Borrower’s expense, cause its counsel to render opinions, which may be
      relied upon by the Lender, the Rating Agencies and their respective
      counsel, agents and representatives, as to nonconsolidation, fraudulent
      conveyance, and true sale or any other opinion customary in securitization
      transactions with respect to the Mortgaged Property and Borrower and its
      Affiliates, which counsel and opinions shall be reasonably satisfactory to
      the Lender and to the Rating
Agencies;

            


    

    


    
      	
               
      

            	
              (c)

            	
              execute
      such amendments to the Loan Documents and organizational documents,
      establish and fund the Replacement Reserve Fund (as defined in the
      Replacement Reserve Agreement), if any, and any Repairs (as defined in the
      Repair Agreement), if any, as may be requested by the Lender or by the
      Rating Agencies or otherwise to effect the Secondary Market Transaction;
      provided, however, that the Borrower shall not be required to modify or
      amend any Loan Document if such modification or amendment would
      (i) change the interest rate, the stated maturity or the amortization
      of principal set forth in the Note, or (ii) modify or amend any other
      material economic term of the Loan;

            


    

    


    
      	
               
      

            	
              (d)

            	
              pay
      all reasonable third party costs and expenses incurred by Lender in
      connection with Borrower’s complying with requests made under this
      Section; and

            


    

    


    
      	
               
      

            	
              (e)

            	
              in
      the event that the provisions of this Instrument or any of the other Loan
      Documents require the receipt of a Rating Confirmation with respect to the
      ratings on the Securities or if the terms of the transaction documents
      relating to a Secondary Market Transaction require a Rating Confirmation
      in order for the consent of the Lender to be given, pay all of the costs
      and expenses of the Lender, Loan Servicer and each of the Rating Agencies
      in connection with any required Rating Confirmation and, if applicable,
      any fees
      imposed by any Rating Agencies as a condition to the delivery of the
      Rating Confirmation.

            


    


    
      
         


      

      
        
          
 PAGE B-12

        
        

      

      
         


      

    


    


     

    


    


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